Kurtas, M., Jr. v. Kurtas, R.

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MICHAEL T. KURTAS, JR. : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
RANDI E. KURTAS : No. 1569 MDA 2020
Appeal from the Order Entered December 3, 2020
In the Court of Common Pleas of Lancaster County Civil Division at
No(s): CI-10-07648
BEFORE: BOWES, J., OLSON, J., and KING, J.
MEMORANDUM BY BOWES, J.: FILED: MARCH 11, 2022
Michael T. Kurtas, Jr. (“Husband”) appeals from the December 3, 2020
order directing him to continue to pay Randi E. Kurtas (“Wife”) alimony in the
amount of $2,026.40 per month. We affirm.
Husband and Wife married on August 22, 1982, separated on July 1,
2010, and divorced on January 3, 2014. In anticipation of the dissolution of
the marriage, on October 11, 2013, the parties entered a comprehensive
postnuptial agreement that, inter alia, established Husband’s obligation to pay
monthly alimony until December 31, 2023. Regarding alimony, the
agreement provided, in pertinent part, as follows:
[Beginning December 31, 2013,] Husband shall pay Wife a sum of
$3,400 per month for a period of eight years (96 consecutive
months) and thereafter pay Wife a sum of $1,000 per month for
an additional two years (24 consecutive months).
Postnuptial Agreement, 11/10/13, at 5, ¶8.
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As it related to the modification of this obligation, the agreement
continued:
Husband’s support obligation is non-modifiable in amount
as well as duration unless Husband experiences an involuntary
reduction in his income through no fault of his own, Wife’s death,
remarriage, or cohabitation with an unrelated male individual. In
the event Husband experiences an involuntary reduction in
his income through no fault of his own, the amount of any
reduction in Wife’s support/alimony shall be in the same
percentage as the reduction in Husband’s income when
taking into consideration his salary, cost of employer provided
health insurance, bonuses, commissions, car allowance, clothing
allowance, any other employer paid benefits, as well as any other
sources of income for Husband. For example, if Husband’s income
is involuntarily reduced by 10% then Wife’s support/alimony shall
be reduced by 10%. In the event Husband does not attempt
to minimize any involuntary reduction in his income and/or
secure alternative employment to maintain an income
stream sufficient to satisfy his support/alimony obligation
to Wife, he shall not be entitled to a reduction in his
support/alimony obligation to Wife.
Id. at 6-7, ¶8 (emphases added). The parties agreed to use Husband’s base
gross salary of $263,588.00, or $5,069.00 per week, to calculate any
modifications to the alimony obligation.
On April 3, 2020, Husband was terminated from his position as the
general manager of Rumson Country Club, a position that he had held for the
prior eleven years. Husband received a $70,000 severance and was eligible
for unemployment. Following Husband’s termination, he filed a petition to
modify alimony, but the parties reached a temporary agreement to permit
Husband to pay reduced alimony in the amount of $2,026.40 per month for
the remainder of 2020. The amount was based on the income drawn from
Husband’s $70,000.00 severance and his unemployment benefits. The
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interim order that memorialized the parties’ agreement continued the alimony
hearing until December 1, 2020.
At the ensuing hearing, Husband sought a further, permanent reduction
in the alimony support based on his continued unemployment. Wife contested
any further reduction, arguing that Husband neglected his contractual duty to
mitigate his loss of income. Rather than deny any deduction, as would be
warranted under the agreement, she proposed that the court assess an
earning capacity to calculate Husbands’ obligation. Both Husband and Wife
testified, and Husband introduced six exhibits to document his employment
search and unemployment status, respectfully.
On December 3, 2020, the trial court entered the above-referenced
order finding that Husband failed to adequately mitigate the reduction of
income, assessing an earning capacity to Husband of $157,100 per year, and
ordered that Husband’s monthly alimony obligation remain $2,026.40. This
timely appeal followed. Both Husband and the trial court complied with
Pa.R.A.P. 1925.
Husband presents four issues for our review:
1. Whether the trial court erred and/or abused its discretion in
finding that Husband had not adequately mitigated his reduction
in income consistent with the parties’ Postnuptial Agreement.
2. Whether the trial court erred as a matter of law in considering
Husband’s earning capacity when interpreting the parties'
Postnuptial Agreement and further erred in concluding that
Husband had an earning capacity of $157,100.00.
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3. Whether the trial court erred in permitting Wife to testify as to
the circumstances that existed prior to the execution of the
Postnuptial Agreement as well as her current financial
circumstances.
4. Whether the trial court erred in failing to address a method for
the application of credit for Husband’s overpayment as stipulated
to by counsel on the record.
Husband’s brief at 5.
We start by noting the relevant legal principles. “A settlement
agreement between spouses is governed by the law of contracts unless the
agreement provides otherwise.” Stamerro v. Stamerro, 889 A.2d 1251,
1258 (Pa.Super. 2005). Such an agreement “imposes a duty of good faith
and fair dealing to perform contractual obligations diligently and honestly.”
Id. at 1261. Furthermore, “When interpreting a marital settlement
agreement, the trial court is the sole determiner of facts and absent an abuse
of discretion, we will not usurp the trial court’s fact-finding function.” Id. at
1257. “In determining whether the trial court properly applied contract
principles, the reviewing court must decide, based on all the evidence,
whether the trial court committed an error of law or abuse of discretion.”
Lewis v. Lewis, 234 A.3d 706, 711 (Pa. Super. 2020) (citation omitted).
In denying Husband’s petition to reduce his alimony obligation, the trial
court reasoned that Husband’s mitigation evidence was insufficient under the
circumstances of this case. The trial court made explicit credibility
determinations against Husband’s assertion that his skills do not translate to
opportunities beyond the management of country clubs or community
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associations. Thus, while acknowledging that Husband applied for thirty-two
jobs within those industries, the court rejected Husband’s contention that his
probability of finding employment that fulfilled his earning potential was best
served by a utilizing a narrow focus. The court determined, “Appellant’s job
search was insufficiently broad so as to be reasonably calculated to return
employment offers, given the effect of the ongoing pandemic on the
hospitality industry.” Trial Court Opinion, 2/19/21, at 3. It reasoned that
Husband’s failure to look for meaningful employment outside of county club
management did not satisfy his contractual obligation to mitigate the loss of
income. It explained its rationale as follows:
Despite having been out of work for eight months prior to
the hearing in December 2020, [Husband] testified that he had
only applied for thirty-two jobs. This translates to a rate of less
than one job application being submitted, on average, per week.
A postnuptial agreement “imposes a duty of good faith and fair
dealing to perform contractual obligations diligently and honestly,”
including the payment of the bargained-for amount of alimony.
Stamerro[, supra at 1261]. The parties’ agreement here clearly
imposes on [Husband] the duty, in the event of an involuntary
reduction in his income, to make every reasonable effort to
minimize the reduction in income and to maintain a sufficient
income stream to continue paying the alimony obligation. As in
Stamerro, the Court here found that [Husband]’s testimony not
credible regarding the efforts taken to prevent or minimize a
reduction in income. While it might not be ideal for [Husband] to
take a position in another industry, [Husband]’s unwillingness to
broaden his job search to positions in other industries does not
meet his duty to maintain an income stream. [Husband]’s
testimony that none of his job skills would translate to another
industry simply was not credible.
Id. at 3-4 (cleaned up).
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Husband’s first argument is that the trial court abused its discretion in
finding that he failed to adequately mitigate the loss of income as required by
the alimony provision in the postnuptial agreement. Essentially, he challenges
the trial court’s factual findings and credibility determinations that led to the
conclusion that he did not explore all available avenues to obtain employment
following his termination from the Rumson Country Club. Noting his age, the
fact that his separation from employment coincided with the economic
shutdown that stemmed from the COVID-19 pandemic, and the uniqueness of
his skill set as a manager of a country club, Husband asserts, “[F]or the court
to conclude that a sixty-six year old individual should look for employment
outside of a field that he has worked in for the last twenty-five years and
during a national pandemic when unemployment is at an all-time high, is
patently unreasonable.” Husband’s brief at 13 (cleaned up). Thus, he
contends that the trial court erred in failing to give adequate weight to the
evidence that he presented concerning his effort to find suitable employment.
In opposition to Husband, Wife contends that the certified record
illustrates that Husband did not act in good faith in attempting to mitigate his
loss of income. Building upon the trial court’s adverse credibility
determination, she argues that Husband’s considerable management
experience and certification within the hospitality industry were sufficiently
marketable and transferrable to other businesses that he could have obtained
“gainful employment” in another industry if he had proceeded in good faith.
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Wife’s brief at 13. She asserts that Husband’s testimony that he submitted
what amounts to one application per week within his narrow trade is
insufficient to established good-faith efforts to mitigate. She further observes
that, although Husband is eligible for retirement, he elected to subsist on
unemployment benefits rather than mitigate the diminished revenue by
accessing his retirement income or social security benefits. Husband’s
amortized severance was exhausted in January 2021, and unemployment
compensation is his sole source of income.
For the following reasons, we conclude that the trial court did not abuse
its discretion in rejecting Husband’s request to reduce his alimony payments
commensurate to his actual income. Husband testified that he does not have
any health conditions that limited his employment opportunities. N.T.,
Hearing, 12/1/20, at 20. As to his attempt to secure a position within his field
of expertise, Husband stated that his search included contacting professional
organizations with extensive career resources, executive search firms that
cater to the “club industry” and employment websites such as Indeed® and
LinkedIn®. Id. at 16. In addition, he worked with several headhunters in
New Jersey, who informed neighboring country clubs of his availability. Id.
at 19-20.
Husband testified that he commits approximately twenty-five hours per
week to the employment search, and, as noted supra, submitted thirty-two
applications in response to various postings garnered from the above-noted
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resources, mostly search firms and professional contacts. Id. at 16-17, 21.
Those opportunities ranged in salary from $100,000 to $300,000. Id. at 19.
Husband also conceded that his professional certification made him
more marketable but stated that his qualifications are industry-specific and
would not translate to other fields. Id. at 17-18 (“One of my focuses is to try
to maintain the same earning potential and the club field is where my
maximum earning potential would lie”). The search focused on the northeast
region but included positions in Georgia and “the Carolinas.” Id. at 18. In
this vein, Husband highlights that he branched out his job search to include
managerial positions in private clubs and community associations. Id. at 12.
As to his unsuccessful efforts, Husband observed, “In some cases it was
simply a contact to let people know that I’m open for work. So[,] it just says
contact and some cases the job has been filled and it says closed. And in
some cases[,] I’m still waiting to hear back from the prospective employer.”
Id. at 13. As to whether he considered retirement, which would have provided
a stable source of income, Husband explained that it was his intention to find
employment because he was not ready to retire. Id. at 14.
Thus, by Husband’s own testimony, Husband averaged less than one
application per week over the eight-month period and refused to look for
employment beyond opportunities in club and facility management. Indeed,
the record is utterly bereft of any inquiries into other aspects of the hospitality
industry beyond managing clubs and community facilities. As the foregoing
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evidence in the certified record supports the trial court’s finding of facts and
credibility determinations, we do not disturb the court’s conclusion that
Husband failed to properly mitigate the loss of income as required by the
express terms of the postnuptial agreement. See Stamerro, supra at 1257(“When interpreting a marital settlement agreement, the trial court is the sole
determiner of facts and absent an abuse of discretion, we will not usurp the
trial court's fact-finding function.”). Accordingly, this aspect of Husband’s
challenge the December 3, 2020 order fails.
Next, we address Husband’s contention that the trial court erred in
imputing an earning capacity of $157,100.00. The crux of this argument is
that the postnuptial agreement does not mandate the use of an earning
capacity and the trial court lacked the authority to modify the accord to impose
it.
Husband is correct insofar as, “Absent fraud, misrepresentation, or
duress, spouses should be bound by the terms of their agreements.”
Stackhouse v. Zaretsky, 900 A.2d 383, 386 (Pa.Super. 2006). However,
the parties modified the contract in 2020 when they elected to temporarily
reduce Husband’s monthly alimony obligation to $2,026.40. This appeal
stems from Husband’s subsequent request for further modification based on
his anticipated reduction of income when he exhausts his severance pay. The
trial court denied that request due to Husband’s failure to satisfy the
contractual duty to minimize the income loss by securing employment to
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maintain a sufficient income stream. As the trial court found that Husband
failed to mitigate the loss of income or secure alternative employment, the
postnuptial agreement provided that Wife was entitled to the full amount of
monthly alimony, $3,400, that was calculated by using the Husband’s base
gross salary of $263,588.00. See Postnuptial Agreement, 11/10/13, at 5, ¶8
(“In the event Husband does not attempt to minimize any involuntary
reduction in his income and/or secure alternative employment to maintain an
income stream sufficient to satisfy his support/alimony obligation to Wife, he
shall not be entitled to a reduction in his support/alimony obligation to Wife.”).
However, rather than impose such a severe obligation upon Husband during
the pandemic, and with no objection from Wife, the trial court elected to
maintain the status quo that the parties previously negotiated.
Thus, although the trial court styled its calculation as using Husband’s
earing capacity, it merely denied Husband’s request for an additional reduction
and held Husband to the obligation that he agreed upon following his
termination from employment. As the court explained, “The amount of
$157,000 leads to the monthly alimony obligation remaining at $2[,]026.40
per month, which was the reduced amount the parties agreed to on an interim
basis following the loss of Appellant's employment.” Trial Court Opinion,
2/19/21, at 5. Considering the foregoing, we reject Husband’s assertion that
the trial court erred in failing to impose the exact terms of the postnuptial
agreement.
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Husband’s next contention is that the trial court erred in permitting Wife
to testify as to the circumstances that existed prior to the execution of the
postnuptial agreement and her current financial circumstances. He argues
that Wife’s testimony concerning the marriage or her post-separation
employment efforts were irrelevant to Husband’s contractual obligation to pay
alimony. He argues that the trial court necessarily relied upon some portion
of the testimony because, in rejecting Husband’s assertion, the trial court
stated that it “afforded little weight to evidence regarding the circumstances
prior to the execution of the Postnuptial Agreement” and that it was “helpful
merely for the purpose of setting the contextual background for the petition.”
Husband’s brief at 21-22 citing Trial Court Opinion, 2/19/21, at 7. Relying
upon the foregoing statements, Husband argues that the trial court erred
insofar as “the court is acknowledging that this evidence did provide some
weight in its decision[.]” Id. at 21. For the reasons that follow, no relief is
due.
In Grove v. Port Auth. of Allegheny Cty., 218 A.3d 877, 888 (Pa.
2019), our High Court reiterated,
The harmless error doctrine underlies every decision to
grant or deny a new trial. A new trial is not warranted merely
because some irregularity occurred during the trial or another trial
judge would have ruled differently; the moving party must
demonstrate to the trial court that he or she has suffered prejudice
from the mistake.
Id. (quoting Harman ex rel. Harman v. Borah 756 A.2d 1116, 1122 (Pa.
2000)).
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As is evident from the trial court’s statement of rationale, the trial court
denied Husband’s entreaty because Husband failed to mitigate the loss of
income as required by the postnuptial agreement. See Trial Court Opinion,
2/19/21, at 3-4. Notwithstanding Husband’s protestations that the
information contributed to the court’s decision to deny his request to reduce
his monthly alimony obligation, we see no reason to ignore the trial court’s
proffered rationale. Stated plainly, absent an indication of prejudice in the
certified record, we will not suppose that the trial court’s determination
concerning Husband’s failure to comply with his contractual obligation was
tainted by Wife’s testimony regarding background information, which was
helpful merely for the purpose of setting the contextual background for
Husband’s petition. Thus, this argument also fails.
Finally, we address Husband’s argument that “The trial court erred in
failing to address a method for the application of credit for Husband’s
overpayment as stipulated to by counsel on the record.” Husband’s brief at
23. This issue concerns a $2,270.72 credit that the parties stipulated was
owed to Husband for overpayments made to Wife over the course of the
alimony obligation. The parties disagreed, however, as to how the
overpayments would be proportionally divided to reduce Husband’s monthly
obligation. Husband argues that the trial court confirmed the stipulated credit
on the record during the hearing and acknowledged the need for an order
explaining how the credit would be assessed but nevertheless neglected to
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address that issue prior to the close of the hearing. Husband’s brief at 23.
Again, no relief is due.
Husband misstates the relevant exchange concerning the credit.
Contrary to Husband’s characterization, the trial did not indicate that it would
address the overpayment immediately. Indeed, during the hearing, the
parties stated that they would determine a method to apply the credits after
the court addressed Husband’s pending request to reduce the alimony
obligation based upon his reduction of income. Wife’s counsel explained,
“once we know th[e] amount [of the reduction], then we can do a final tally
for the last two and a half years of alimony. We were intending to address
it that way.” N.T. Hearing, 12/1/20, at 6 (emphasis added). Thus, as the
trial court accurately observed, “[T]here was no request made for a method
for addressing the over payments, and in fact the discussion with counsel on
the record indicated that the parties intended to come to an agreement to
address the amount of overpayment after a determination was made on
Appellant's Petition to Modify Alimony[.]” Trial Court Opinion, 2/19/21 at 7.
As neither party proposed a method to prorate the credit, the trial court did
not err or abuse its discretion in failing to revisit the issue sua sponte in the
December 3, 2020 order.1
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1 Husband did not request specific relief in relation to this issue. To the extent
that he desires to have the credit applied to proportionally reduce his monthly
alimony obligation, he need only submit a proposal to the trial court as the
parties envisioned during the December 2020 hearing.
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Therefore, since none of Husband’s issues merits relief, we affirm the
trial court’s order directing him to continue to pay Wife $2,026.40 per month
in alimony.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/11/2022
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