M.B. v. K.B. ( 2016 )

J-A01012-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
M.B. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
K.B.
Appellant No. 832 EDA 2015
Appeal from the Order Entered February 13, 2015
In the Court of Common Pleas of Chester County
Domestic Relations at No(s): No. 01295N2013 PACSES No. 090108307
BEFORE: LAZARUS, J., OTT, J., and STEVENS, P.J.E.*
MEMORANDUM BY STEVENS, P.J.E.: FILED APRIL 08, 2016
Appellant K.B. (“Father”) appeals from the order entered by the trial
court in this child support case. We vacate and remand for further
proceedings.
The lower court aptly summarized the history of the case and its
findings and conclusions as follows:
This is an action by plaintiff [Appellee M.B., hereinafter “Mother”]
to modify an existing support order entered on September 18,
2013 with an effective date of September 1, 2013. The original
order covered two children, [Ma.B.] (d.o.b. 9-23-09) and [Ko.B.]
(d.o.b. 12/31/04). Another child, [Kh.B] (d.o.b. 3/28/14), was
conceived and born subsequent to the parties[’] divorce.
Plaintiff seeks to have [Kh.B.] added to the order as of April 16,
2014. A further issue is the earning capacity of each party.
The parties have a 50-50 custody arrangement for [Ma.B.] and
[Ko.B.]. While [Mother] has had primary custody of [Kh.B]l
since birth, the parties agreed that she too would be included in
the 50-50 custody arrangement effective March 15, 2015.
*Former Justice specially assigned to the Superior Court.
J-A01012-16
When the order of September 18, 2013[,] was entered,
[Mother’s] monthly net income was “determined” to be $1,500
and [Father’s] $2,000. I1 use the term “determined” loosely as
neither party brought wage statements or tax returns to the
conference to verify their incomes. They, not the court,
“determined” what their incomes were. Now that the court has
to “determine” earnings/earning capacity, it comes as no
surprise that the parties disagree significantly as to what their
earnings were or should be. The fact that both are self-
employed in occupations where cash is a common method of
payment complicates my analysis.
Testimony was taken on December 16, 2014[,] at which time I
had the opportunity to observe the witnesses, judge their
demeanor and assess their credibility. Each witness will be
addressed separately.
I also have the benefit of the parties[’] briefs.
Mrs. [B.] [Mother]
[Mother] worked in the day care in the day care industry where
she earned approximately $30,000/year gross. Once her
children were born she was able to bring them to work with her
at no cost.
After the parties initially separated, she babysat out of her home
for several children earning a comfortable sum. However, when
she became pregnant with [Kh.B.] she had to cut back on the
number of children she could supervise and, significantly, had to
stop working for several months after [Kh.B.] was born.
Obviously, this interruption caused a loss of clientele which is
understandable. Further, the ability to supervise not only her
own children, but other children was complicated by having to
tend to an infant.
To the argument that she should attempt to return to a day care
position, she responded that due to the ages of the children she
____________________________________________
1
All first-person references in the lower court’s opinion are retained for ease
of reading.
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would have to pay for their care which would greatly reduce her
income.
[Mother] suggests that her current situation of babysitting at
home is the most sensible approach, a position I agree with FOR
THE TIME BEING.
[Father] argues that [Mother’s] admitted monthly expenses of
approximately $2,130 supports the conclusion that she must be
earning $25,000+/year babysitting. [Mother] countered that
family was assisting her.
A further complication for [Mother’s] business model is that state
law regulates the number of children that can be babysat at any
one time. I realized this may be one of those regulations
honored more in the breach than by compliance. However, it is
a limitation on her earnings/earning capacity.
[Mother’s] 2013 tax return showed receipt of gross income of
$18,128 from her babysitting business. I did not have the
benefit of a 2014 return, but I imagine it would not be greater
than her 2013 income given the birth of [Kh.B.] and the impact
that had on [Mother’s] ability to babysit other people’s children.
Accordingly, for 2014, I determine[d] [Mother’s] earning
capacity to be $18,128. For 2015, I determine[d] her earning
capacity to be $24,000, as I believed she will be able to rebuild
her clientele to its former level.
Mr. [B.] [Father]
[Father] is obviously very distressed by the dissolution of the
marriage and asserts that it has impacted his ability to work. He
also asserts that his business has suffered from the decision of
former clients to take work he previously did for them “in house.’
It has been my experience as a judge and practitioner that
“competent tradesmen” are always in demand no matter what
the state of the economy is. While certainly larger clients may
cut back in tight economic times, there are always a myriad of
smaller jobs available for one wanting to work. In happier
times, [Father’s] business did very well. I am certain it did so as
he was motivated to perform for the benefit of his family. It is
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therefore not surprising that the downturn in his business
coincides with the dissolution of his marriage.2 Interestingly, as
2
Exhibit D-3 shows the decline in earnings that, in my view,
coincides with the dissolution of the family unit: 2010 - $585,
142.55; 2011 - $685,609.01; 2012 - $405,099.03; 2013 - $335,
411.91.
of the date of the hearing, [Father] did not have available for
review his 2014 year to date profit and loss statement. In fact,
he only submitted the 2013 tax return of his company after the
hearing of December 16th was concluded[, pursuant to court
order.] I am considering the document as it’s preparer testified
at the hearing. Initially, I note that there is a positive $12,000
difference between Exhibit D-3 and the 2013 tax return “gross
receipts” number. Further, it is my understanding that Mr.
Dominick, the CPA [and preparer of the return], was given the
supporting data by [Father] and has just begun functioning as
his accountant.3 Despite my concerns, I accept the 2013
3
A new accountant lacks a sense of the business “long term” as
he has nothing to compare the data given to him with the
historical record of the business. Accordingly, the numbers used
for this return are viewed with some skepticism on my part.
business tax return as accurate.
[Father] operates his business from his home which affords him
a tax benefit yet his [business] return shows a “rent” charge.
He also purchased a new truck to replace one that was only 13
months old. His stated reason for doing so is not credible. I am
hard pressed to accept “automobile and truck expenses” of
$10,838 for a single vehicle and that it cost $16,374 to fuel. I
note that [Father] received a $26,093 “loan” from his company.
There are significant legal fees ($6,015) and a “uniform” cost of
$100/month. While all these deductions pass the federal tax
SMELL test, they are warning bells to me that someone is
intentionally trying to drive down their “income.” I recognize
that in “happier times” both parties are generally willing
participants in this type [of] conduct as the savings drop to the
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J-A01012-16
“joint” bottom line, i.e., real dollars available to spend.
However, in times of conflict, this type of income adjusting
quickly becomes unacceptable to one of the parties.
[Father] has an obligation to maximize his income for the benefit
of his children even if doing so results in an indirect benefit to
his former wife. The focus of all, court and parents, needs to be
on the children, not indirect beneficiaries. When I add back
“suspect deductions”4 I find [Father’s] 2013 income to be just
over $100,000.00, a sum consistent with what a competent
tradesman of his experience would earn. Accordingly, I find his
earning capacity to be $104,000.00/year for 2013 and going
forward.
4
To me, a “suspect deduction” is one that while allowed for
federal tax purposes permits a person to shift what would
otherwise be taxable outlays or income to tax deductible ones or
to have the use of funds (a loan) versus ownership of the funds
(income).
The Accountants
Ms. Evans testified for [Mother] and Mr. Dominick testified for
[Father]. Neither contributed anything of significance to my
analysis.
****
Lower Court Opinion, filed February 13, 2015, at 1-5.
The lower court entered an order directing child support payments
consistent with its determination of the parties’ respective earning
capacities. Father filed this timely appeal, in which he raises the following
issues for our review:
1. Whether the lower court abused its discretion when it ignored
and misapplied law by placing the entire burden of supporting
the children on Father, held Father to an artificially high
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income, considered matters not of record and did not
accurately calculate Mother’s income available for support.
2. Whether the lower court abused its discretion by exercising
judgment that is shown by the record to be manifestly
unreasonable as well as the product of partiality, prejudice
and bias toward Father and by making assumptions that were
gender based.
3. Whether the lower court’s decision must be reversed because
there is insufficient evidence on the record to sustain the
support order that holds Father to an artificially high and
unsubstantiated $104,000.00 gross income per year and
Mother to an unreasonably low $18,000.00 gross income per
year where the record indicated that Mother’s true income
and her earning capacity were in excess of $30,000.00 gross
per year.
Appellant’s brief at 5.
Our standard of review over child support orders is:
When evaluating a support order, this Court may only reverse
the trial court's determination where the order cannot be
sustained on any valid ground. We will not interfere with the
broad discretion afforded the trial court absent an abuse of the
discretion or insufficient evidence to sustain the support order.
An abuse of discretion is not merely an error of judgment; if, in
reaching a conclusion, the court overrides or misapplies the law,
or the judgment exercised is shown by the record to be either
manifestly unreasonable or the product of partiality, prejudice,
bias or ill will, discretion has been abused. In addition, we note
that the duty to support one's child is absolute, and the purpose
of child support is to promote the child's best interests.
Kimock v. Jones, 47 A.3d 850, 853-54 (Pa.Super. 2012).
Essentially, Father’s issues coalesce to challenge the court’s
calculations of the parties’ respective earning capacities. To the extent
Father charges error in the calculation of Mother’s earning capacity, our
careful review leads us to disagree, as the court’s determination in this
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regard finds ample support in the record. In this respect, we adopt the
attached lower court opinions and their expression of rationale as to
Mother’s earning capacity.
As for Father’s earning capacity, however, we determine that the court
erroneously based its calculations on important evidence not introduced into
evidence. It is well-settled that a trial court may not consider evidence
outside of the record in making its determination. Ney v. Ney, 917 A.2d
863, 866-67 (Pa.Super. 2007) (citing Eck v. Eck, 475 A.2d 825, 827
(Pa.Super. 1984)). “Nor may this court uphold a trial court's order on the
basis of off-the-record facts.” Eck, at 27 (citing In re Frank, 423 A.2d
1229 (Pa.Super. 1980)).
In Ney, this Court reversed a support order and remanded for a
redetermination of the father’s earning capacity where it was evident that
the trial court had based its earning capacity calculations in large part on its
own internet search of job opportunities in the father’s field of work, even
though such results were unsubstantiated by evidence of record:
It is apparent that the trial court found that [the father] willfully
failed to seek appropriate employment based upon its own
internet job search. There is no other evidence of record that
there were suitable positions available, and that [the father]
failed to apply for these positions. Thus, we conclude that the
trial court abused its discretion when it considered and relied on
this evidence.
On this basis, we reverse the Orders of the trial court, and
remand for a determination of [the father’s] earning capacity
based only upon the evidence of record. In light of our holding,
we need not address [the father’s] remaining claim of error.
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Id. at 868. Compare Commonwealth v. Bogosian, 12 A.3d 448, 460-61
(Pa.Super. 2011) (distinguishing Ney where trial court, deprived of precise
valuation records in father’s control, nevertheless relied on evidence of
record in applying unconventional method of calculating equitable
distribution as equities in case required).
Upon our review of the record, we conclude that the lower court,
notwithstanding its thoughtful, perceptive, and concerted efforts to promote
the equities of the case, improperly considered evidence outside of the
record in determining Father’s earning capacity. Pivotal to the lower court’s
calculation was its consideration of the 2013 federal tax return of Father’s
business, which the court ordered Father to supply only after the hearing’s
conclusion. Indeed, the court indicated the business return was necessary
to a meaningful analysis of Father’s earning capacity:
THE COURT: Well, to get a real fix on everything here, I
need [Father’s] 2013 business tax return. So by next Monday,
counsel, I want you to provide me with a copy of that 2013
business return and provide the other side with it. Just for
information purposes, I will look at it myself, because while
there are plenty of things that get deducted, they don’t
necessarily get deducted for support purposes, and we will have
an opinion for you promptly thereafter. Have a nice day.
N.T. at 78-79.
In its written opinion, the court attempts to justify its use of the critical
tax return de hors the record on the fact that the accountant who prepared
the return testified at the hearing. The accountant, however, provided no
testimony regarding key aspects of the business return that factored heavily
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into the court’s decision,2 nor did any other evidence admitted at the hearing
relate to such information. For example, the business return’s listing of
deductions such as significant legal fees and truck and fuel expenses, which
the court viewed with incredulity and, ultimately, rejected in its post-hearing
opinion and order, were never addressed at the hearing; indeed, Father had
no opportunity to explain these amounts to the court. The court likewise
refers to various discrepancies between Father’s personal and business tax
returns with respect to gross sales and wages he drew from his S
corporation, “two glaring errors [which] certainly called into question the
accuracy of the information [Father] was providing to me.” Lower Court
Opinion, filed May 29, 2015, at 2-3. Again, the court acknowledges that it
relied on evidence not of record to reject evidence of earning capacity that
Father presented at trial.
Therefore, while the business return proved essential to a meaningful
assessment of Father’s income and earning capacity for child support
purposes, and we agree with the lower court’s demand for such information,
we conclude it was nevertheless necessary for the court to receive the return
as evidence in open court where the parties could examine it, testify to it,
and thereby place it in context for the benefit of the court’s analysis. To
____________________________________________
2
Indeed, the court indicates in its written opinion and order that neither
accountant contributed anything significant to its analysis.
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have rendered an ultimate decision on earning capacity on the basis of
information obtained off the record was error.
Also without support in the record were the court’s assumptions as to
Father’s ability to recoup all income lost from the discontinuation of large
contracts by simply accepting a “myriad” of smaller jobs in their stead.
Again, there was insufficient evidence adduced at trial to support this
conclusion, which the court appeared to base on nothing other than its own
experience and personal belief that there is always work available for good
tradespeople. While both accountants testified to improving economic
conditions in the local construction industry, such testimony fell well short of
amounting to an earning capacity opinion that Father had the ability to offset
all revenue losses from discontinued large contracts but had simply chosen
not to act on such ability.
Our decisional law requiring child support orders based on on-the-
record facts constrains us, therefore, to vacate the lower court’s order and
remand for further proceedings, where the court shall accept the 2013
business tax return in open court and invite testimony on it as well as on
any other matter it deems pertinent to its task of ascertaining Father’s
earning capacity.
Order vacated. Case remanded for proceedings consistent with this
decision. Jurisdiction relinquished.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/8/2016
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Circulated 03/22/2016 01:47 PM
MEGHAN BARLOW, :IN THE COURT OF COMMON PLE~S
Plaintiff :CHESTER COUNTY, PENNSYLV ANTA
vs :PACSES CASE NO. 090108307 /
KEVIN BARLOW, :DOCKET NO. 01295N2013
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OPINION
This is an action by plaintiff to modify an existing support order entered on
September 18, 2013 with an effective date of September 1, 2013. The original order covered
two children, Madison (d.o.b. 9-23-09) and Konnor (d.o.b. 12/31/04). Another child, Khloe
(d.o.b. 3/28/14), was conceived and born subsequent to the parties divorce. Plaintiff seeks to
have Khloe added to the order as of April 16, 2014.1 A further issue is the earning capacity
of each party.
The parties have a 50-50 custody arrangement for Madison and Konnor. While wife
has had primary custody of Khloe since birth, the parties agreed that she too would be
included in the 50-50 custody arrangement effective March 15, 2015.
When the order of September 18, 2013 was entered, wife's monthly net income was
"determined" to be $1,500 and husband's $2,000. I use the term "determined" loosely as
neither party brought wage statements or tax returns to the conference to verify their
I Defendant questioned paternity which was st:ientifically established as of August 15, 2014.
incomes. They, not the court, "determined" what their incomes were. Now that the court has
to "determine" earnings/earning capacity, it comes as no surprise that the parties disagree
significantly as to what their earnings were or should be. The fact that both are self
employed in occupations where cash is a common method of payment complicates my
analysis.
Testimony was taken on December 16, 2014 at which time I had the opportunity to
observe the witnesses.judge their demeanor and assess their credibility. Each witness will
be addressed separately.
I also have the benefit of the parties briefs.
Mrs. Barlow
In happier times, Mrs. Barlow worked in the day care industry where she earned
approximately $30,000/year gross. Once her children were born she was able to bring them
to work with her at no cost.
After the parties initially separated, she babysat out of her home for several children
earning a comfortable sum. However, when she became pregnant with Khloe she had to cut
back on the number of children she could supervise and, significantly, had to stop working
for several months after Khloe was born, Obviously, this interruption caused a loss of
clientele which is understandable. Further, the ability to supervise not only her own children,
but other children was complicated by having to tend to an infant.
To the argument that she should attempt to return to a day care position, she
responded that due to the ages of the children she would have to pay for their care which
would greatly reduce her income.
Wife suggests that her current situation of babysitting at home is the most sensible
approach, a position I agree with FOR THE TIME BEING.
Husband argues that wife's admitted monthly expenses of approximately $2,130
supports the conclusion that she must be earning $25,000 +/year babysitting. Wife countered
that family was assisting her.
A further complication for wife's business model is that state law regulates the
number of children that can be babysat at any one time. I realize this may be one of those
regulations honored more in the breach than by compliance. However, it is a limitation on
her earnings/earning capacity.
Wife's 2013 tax return showed receipt of gross income of $18,128 from her
babysitting business. I do not have the benefit of a 2014 return, but imagine it would not be
greater than her 2013 income given the birth of Khloe and the impact that had on wife's
ability to babysit other people's children.
Accordingly, for 2014 I determine wife's earning capacity to be $18,128. For 2015, I
determine her earning capacity to be $24,000 as I believe she will be able to rebuild her
clientele to its former level.
Mr. Barlow
Mr. Barlow is obviously very distressed by the dissolution of the marriage and
asserts that it has impacted his ability to work. He also asserts that his business has suffered
from the decision of former clients to take work he previously did for them "in house'>.
It has been my experience as a judge and practitioner, that "competent tradesmen"
are always in demand no matter what the state of the economy is. While certainly larger
clients may cut back in tight economic times, there are always a myriad of smaller jobs
available for one wanting to work. In happier times, Mr. Barlow's business did very well. J
am certain it did so as he was motivated to perform for the benefit of his family. It is
therefore not surprising that the downturn in his business coincides with the dissolution of
his marriage.2 Interestingly, as of the date of the hearing, defendant did not have available
for review his 2014 year to date profit and loss statement. In fact, he only submitted the
2013 tax return of his company after the hearing of December 16111 was concluded. I am
considering the document as it's preparer testified at the hearing. Initially, I note that there is
a positive $12,000.00 difference between Exhibit D-3 and the 2013 tax return "gross
receipts" number. Further, it is my understanding that Mr. Domenick, the CPA, was given
the supporting data by Defendant and has just begun functioning as his accountant.' Despite
my concerns, 1 accept the 2013 business tax return as accurate.
Defendant operates his business from his home which affords him a tax benefit yet
his return shows a "rent" charge. He also purchased a new truck to replace one that was only
1
Exhibit D-3 shows the decline in earnings that, in my view, coincides with the dissolution of the family unit:
2010 - $585, 142.55; 2011 - $685,609.01; 2012 - $405,099.03; 2013 - $335,4 I 1.91
3
A new accountant lacks a sense of the business "long term" as he has nothing to compare the data given to
him with the historical record of the business. Accordingly, the numbers used for this return are viewed with
some skepticism on my part.
13 months old. His stated reason for doing so is not credible. I am hard pressed to accept
"automobile and truck expenses" of$10,838 for a single vehicle and that it cost $16,374 to
fuel. I note that Mr. Barlow received a $26,093 "loan" from his company. There are
significant legal fees ($6,015) and a "uniform" cost of $100/month. While all these
deductions pass the federal tax SMELL test, they are warning bells to me that someone is
intentionally trying to drive down their "income". I recognize that in "happier times" both
parties are generally willing participants in this type conduct as the savings drop to the
"joint" bottom line, i.e., real dollars available to spend. However, in times of conflict, this
type of income adjusting quickly becomes unacceptable to one of the parties.
Mr. Barlow has an obligation to maximize his income for the benefit of his children
even if doing so results in an indirect benefit to his former wife. The focus of all, court and
parents, needs to be on the children, not indirct beneficiaries. When I add back "suspect
deductions'" I find Mr. Barlow's 2013 income to be just over $100,000.00, a sum consistent
with what a competent tradesman of his experience would earn. Accordingly, I find his
earning capacity to be $104,000.00/year for 2013 and going forward.
The Accountants
Ms. Evans testified for Plaintiff and Mr. Domenick testified for Defendant. Neither
contributed anything of significance to my analaysis.
4
To me, a "suspect deduction" is one that while allowed for federal tax purposes permits n person to shift what
would otherwise be taxable outlays or income to tax deductible ones or to have the use of funds (a loan) versus
ownership of the funds (income).
It is in the parties mutual best interest to maximize the income available by
allocating tax deductions between themselves in the most beneficial manner. Accordingly,
my calculations were done with Defendant claiming all three children on his return.
Based on the foregoing I enter my
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/ .3 · day of February, 2015, the Order of September 18,
``' ~:,', AND NOW, this
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~13 f·iMODIFIED as follows:
1. Effective Aprl 16, 2014, Khloe Barlow is included for purposes of support and
Defendant shall pay the following sums for the support of 3 children:
a) For the period April 16 to December 31, 2014, the sum of
$1,664.44/month5 plus $90.00/month on arrears, and
2. Effective January 1, 2015 thru March 14, 2015, the sum of $1,63 l. l 5/month6 plus
$90.00/month on arrears, and
3. Effective March 15, 2015 forward the sum of$1,223.77/month7 plus $90.00/month
on arrears, and
5 Plaintiff at $18, 128, Defendant at$ I 04,000 with Defendant claiming the 3 children and Plaintiff having
Khloe full time with shared custody of the other children.
6 Plaintiff at $24,000 Defendant at $104,000 with Defendant claiming the 3 children and Plaintiff having Khloe
full time with shared custody of the other children.
7 Plaintiff at $24,000, Defendant at $104,000 and shared custody of all children
4. Unreimbursed medical expenses are to be allocated 84% to Defendant and 16% to
Plaintiff for the period up to January 1, 2015. Thereafter, said expenses are to be
allocated 80% to Defendant and 20% to Plaintiff.
In all other respects, the order of September 18, 2013 is AFFIRMED.
BY THE COURT:
Thomas G. Gavin S.J.
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APPENDIXB
MEGHAN BARLOW, IN THE COURT OF COMMON PLEAS
Plaintiff
CHESTER COUNTY, PENNSYLVANIA
vs. NO. 1295N-2013 /
KEVIN BARLOW,
Defendant r:~
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Barbara Schneider, Esquire, on behalf of the Defendant : ··, .
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Defendant's concise statement of matters complained of raises
twenty-three (23) separate grounds for relief, one of which contains four
I sub-paragraphs. Additionally, Defendant in his penultimate claim of error,
· #24, seeks leave to (file),
"Other errors that may become apparent upon review of the record
once it is complete".
Clearly Defendant is dissatisfied with my opinion. However, his shotgun
approach is the very antithesis of what the statement envisions especially
when he repeats the same theme in different forms.
Where possible, I have grouped together what I consider to be
related issues for discussion:
#1, #5, #6 and #15
I based Defendant's 2014 income on his 2013 tax return which
\i counsel asserts was not part of the record.
II
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III
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The hearing in this matter was held on December 16, 2014.
Interestingly, Defendant did not have available his year to date 2014 profit
and loss statements which l assume business people prepare on a monthly
basis. He did present his 2013 personal tax return, see Exh. D-2. l note
that in domestic relations cases it seems to be a common practice for one
or both of the parties not to have available the very information that the
court needs to render a decision. This is especially true in cases where
one or both of the parties are self-employed. Defendant's 2013 personal
tax return is meaningless without access to his business return which was
the source of the income listed on the personal return. As his income was
very much at issue, I anticipated that he would have the relevant
information at hand. While his 2013 business return existed, it was not
produced prompting me to direct defense counsel:
" to provide me with a copy of that 2013 business return and
provide the other side with it. Just for information purposes, I will look
at it myself ..... " NT 12-16-14, pg. 78 L25-pg 79 L3.
Obviously, defense counsel knew I was going_ to consider it in reaching my
decision, and I did. I attach it as an exhibit to this opinion.
Defendant submitted Exh. D-3 which listed his sales for the years
2010 thru. 2013. I note that D-3 shows gross sales of $335,41 :1.00 for 2013
whereas the 2013 corporate tax returns shows sales of $347,080.00.
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Deducting the cost of goods sold, Defendant's company had net (before
expenses)iricome of $191,713.00. Defendant's 2013 persona-I tax return
showed wages of-$38,289.00 whereas the 2013 corporate tax return
showed "compensation of officers" as $49,337.00. These two glaring-
errors certainly called into question the accuracy of the information
Defendant was providing to me. Defendant operates his business out of
his home and I therefore disallowed the rent deduction of $6,657. 00. I
added back 50% of his vehicle and gas expense, to wit $13,606.00. I
added back 50% of his internet, legal and professional fees - $3,757.00
and 100% of his uniform charge, $1,230.00. I disallowed depreciation of
$~4,431.00 claimed on his trucks.
Form 8824 of the 2013 corporate tax return shows that he traded in a
truck acquired on September 11, 2012 for another truck on October 15,
2013. His stated reason for doing so was that,
"The truck had a transmission problem that the dealership would not
warrantee. So as I was driving down the road, the truck would
continuously buck and lose speed. That's the worst thing for any
construction company to call your customer and say your truck is
broke down."
NT 12-16~14, pg. 76, L 17-23
I
I did not credit that testimony as I find it hard to believe that the
11 transmission in a 2012 truck would be out of warranty in a year. Further, I
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find it difficult to accept that a person whose business was supposedly
declining would incur an additional.$30,000 expense to buy another truck
from the .same company that would not warrant the current one! Thus, I
added back $14,431.00. His accountant indicated he contributed
$17,500.00 to his retirement plans. While it is certainly prudent for him to
. be forward lookinq in setting money aside for his retirement, that must be ·
subordinate to the current needs of his children. \Nhen I total these sums I
get actual earnings greater than the $104,000.00 earning capacity I
ascribed to him. Accordingly, no error was committed.
Defendant asserts error due to his inability to contest the
reasonableness of the business deductions I added back. Again, had
Defendant timely produced his 2013 business return this would not be an
issue. When I directed that the return be provided. counsel could have
requested that the record be kept open to address the return. Having failed
to do so, the issue is waived.
#2, #3, #11, #12 and #19
All these issues revolve around my determination of Plaintiff's
"earning capacity". Early in the parties' marriage, Plaintiff worked as the
director of a child day care center where she earned $30-,000.00/year1.
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See NT 12-16-14, pg. 12, L24
4
Then, she had one child who was permitted to attend the day care center
at no cost. Id. @ L 22.
Once the parties divorced (2012), she began a home-based
babysitting business. During this time there appears to have ·been a
reconciliation and she became pregnant with their child, Khloe, who was
born on March 28, 2014. Unfortunately, the reconciliation failed and the
parties now live separately. However, Plaintiff's .abllityto work is presently
limited by the fact that she has an eight month old to care for as well as
three other children, two of whom are under the age of ten.
Plaintiff's current ability to· grow her babysitting business is further
limited due to State- regulations
.
as to the number. and. ages of children she
can babysit. In addition to her own infant, Khloe, she currently babysits
another infant, Aden, who is younger than Khloe. She must also watch her
own children when they are not in school. Her children are counted by the
State regulations in the total number of children she can watch which is a
further limitation on her earning capacity.
. Plai_ntiff testified that if she returned to a day care setting she would
have to pay for her children to attend day care and therefore such a
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position did not make economic sense.2 I agreed and determined that her
plan of working out of her home made sense as:
1) She is caring for their infant, Khloe, and
2) She has all her children3 50% of the time, and
3) She watches all the children after school etc. during the 50% time
period Defendant has them, and
4) She has been attempting to re-establish her babysitting business l
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which suffered an understandable downturn due to the birth of
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Khloe in March of 2014, and 1
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5) She earned ·$18,000.00 in 2013 when she did not have an infant of I
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her own to care for, and I
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6) It is expected that she would be out of the workforce post-delivery j
!
of Khloe and suffer a decrease in earnings in 2014, and
!!
7) It is expected that it will take time to maximize the number of
children that she supervises, and, I
8) The current arrangement is best suited to the circumstances I
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presently confronting her. II
1
Had Plaintiff not given birth to Khloe, I would have anticipated her 2014 I
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income to be greater than her 201·3 income as her business would I
!!
See NT 12-16-15, pg. i2, L 8-14
I ) Beginning March 15, 2015
,1 6
11
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presumably have grown. It is certainly reasonable for a new mother to be
out of the workforce for several months post-delivery and I therefore kept
her 2014 income at the same level as 2013. For 2015, I 'believed
$24,000.00 to be a reasonable income based on her past earnings and
that Khloe would no longer be an infant allowing Plaintiff more flexibility as
to the mix of children she can supervise. This is the very analysis called
for by Pa.RCP, Rule 1910.16-2(d}(4). Plaintiff is essentially a high school
graduate with on the job training in daycare whose greatest income was
earned when she had one child. Now, she has four and significant
childcare responsibility for HER OWN children. Frankly, I think she Is
doing the best she can and the income I ascribed to her reflects that fact.
#4, 8, 14, & 18
Defendant asserts that I considered facts not of record in assessing
his income. In my capacity as judge, I routinely come in contact with
"trades people", most often in criminal cases. As they have fines and costs
to pay, I inquire as to their income and job availability as it aids me in
setting a payment schedule. I see "trades people" who-are employees and
those who own their own business. I see every skill level from unskilled to
highly skilled. The qreater the skill, the higher t0e pay. I have been asking
these questions for 30 years, a period that includes boom and bust years
7
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for the trades. Fortunately, Chester County is blessed with well-educated
citizens who are usually the last to be impacted by a downturn in the
economy, is home to major businesses and has fared much better
economically than other parts of the state and country. All of this is a
matter of public knowledge which I did consider in assessing defendant's
comments as to his business and earnings. I did and do think it suspect
that the decline in defendant's business coincided with the dissolution of his
marriage. .He would not be the first husband to cut back on his work efforts
because of marital discord. Just because he said his business has
suffered, does not mean I have to believe· him. I did not as his testimony
was inconsistent with what is.comrnonly known.
As to his 2014 business records, I did draw a negative inference from
his failure to produce them. A person whose business was supposedly on
the decline would be expected to produce records documenting same.
#13 & 17
Defendant asserts that I placed the sole burden of supporting the
parties' children on him contrary to law.
I did no such thing. I gave the work-at-home mother of an infant and
two children under age ten an earning capacity of $18,000.00 to
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II,
$24,000.00. She is certai.nly doing her part to meet the financial needs of
the children consistent with her other obligations to them.
Defense counsel is free to characterize· my comment that defendant
should not. be setting aside funds for his future needs when the children
have current needs as, "maximizing his income for the benefit of his
children". I did NOT suggest that only defendant do so. Plaintiff did not
set aside dollars for her future needs as she had no such dollars available
to her. Rather she was spending everything she earned for the children's
current needs and benefit.
ram unable to address this issue as it grossly misstates plaintiffs
I prior income and also asserts, CONTRARY TO THE POSITION
OTHERWISE TAKEN, that Defendant's income "had been increasing from
prior years".
#10
Defendant asserts that I should have considered financial
assistance provided to plaintiff by family and/or third parties. Such funds
are not "income" for support purposes. See 23 Pa. CSA §4302.
#7 & 16
9
As to business expenses, I am not required to follow federal tax
deductibility standards. I have no doubt that defendant operated his
business out of his home. However, he would have borne the expenses of
that part of his home jf he did not operate his business from it. Vehicle
expenses are both business and personal and I did not allow the write off
the federal tax authorities allow. The same is true for the "uniform"
expense.
Defendant determines whether money taken from the business is a
loan, salary etc. How the money is labeled affects its deductibility to the
business and potential taxability to a third party. Loans are not income.
I However, loans put money in the recipient's pocket making it .available to
spend as he chooses. Here the fact that defendant was both recipient and
lender prompted me to disregard his self-serving characterization of the
transaction and to view it as income.
Defendant's corporate tax return for 2013 includes form 8824, "Like-
Kind Exchanqes". The "new" truck cost $42,2~5.00 and the "old" truck was
valued at $11,624.00. This transaction sounds like a "purchase" to me.
II 10
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#20
Footnotes 5, 6 & 7 show the facts upon which my support
calculations-were based. My opinion shows how I arrived at the various
enable Defendant to verify the calculations 1 ran as everyone uses the
same tax software system.
#21
Obviously I disagree that my findings evidence bias. I believe they
are supported by the record.
Plaintiff produced her tax return which I considered together with all
the evidence in setting her "earning capacity". I credited plaintiff's
I statements a~ to her earnings but determined she had a greater "earning
capacity" and used it in my calculations.
I do not understand the complaint as to Plaintiff's expenses being
accurate. She was asked to state them and did so. They were not
challenged on cross. Regardless, they were a non-factor in my decision.
11
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I have already addressed Plaintiffs earning capacity.
To the suggestion that Plaintiff should be able to work" when
· defendant has the children, .I accepted her explanation as to why that was
not possible. She testified,
I
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Q. So what arrangements have you made to have children during
the time that Mr. Barlow has the children 50 percent of the
time?
A. Mr. Barlow does not have them during the day when I work.
They're with me. In the summer when they're off from school I
and during the week, Madison is with me. It always has been l
that. That has not changed thus far.
II
NT 12-16-14, pg.11,L23--pg.12, L5
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AND
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THE COURT: Now, in the period where your former husband has l!
the two children during the day, assuming he is at !
'
· work, who watches the children during the day? !
!
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THE WITNESS: I do. I
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THE COURT: So even though he has them 50 percent of .the time, !
I'm not commenting negatively on it, physically, a I
portion of that, 50 percent of the time, the children !
are with you because he is working? l
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I assume defense counsel means that she should be able to work more hours or at different employment
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when Defendant has the children. In light of her testimony, I find this suggestion unworkable, no pun intended.
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THE WITNESS: Yes but nighttime is-how they delegate the custody_;
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yes.
NT 12-16-14, pg. 19, L8-19
I respectfully submit that Defendant's appeal be denied.
BY THE COURT:
T · ornas G. Gavin, S.J.
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