Last Fall brought us a decision from the Supreme Court of Pennsylvania holding that a grandparent did not have standing to terminate a Father’s parental rights incident to an adoption. Last week brought us a Superior Court case in which the appeal comes from a Mother and her own Father in a custody case involving a 12-year-old child.

Mother had a girlfriend. To show the seriousness of their commitment, Mother and Girlfriend decided they would adopt each other’s children. The family remained intact for 13 years until April, 2011. A few months after the split, Girlfriend filed to obtain sole legal and physical custody of her natural child (a son) and primary physical custody of Mother’s child, a daughter. Mother counterclaimed for primary custody of both children.

After some initial skirmishes in the Montgomery County courts, a consent order was formed in August, 2012. Each parent would keep primary custody of her natural child. Problems began to arise between Mother and her adopted son and a parent coordinator was appointed who thought psychiatric and psychological support was necessary. In addition, a custody evaluation was ordered at the instigation of the parent coordinator.

Matters boiled over and on May 27, 2013, Mother shot Girlfriend in the presence of both minor children. Mother was charged with attempted homicide and endangering the welfare of the children. She was sentenced to a lengthy prison term exceeding 20 years. Mother was prohibited from communicating with her adopted son and from discussing the incident with her own natural child. Mother’s assertion to this day is that she acted in self-defense.

Once the shooting took place, Girlfriend (who had been shot by Mother) filed an abuse action and emergency custody petition. Mother’s own Father (Grandfather) filed a petition to intervene, requesting that he have custody of his granddaughter, the natural child of Mother. His allegation was that Girlfriend was tolerating physical abuse of the 11-year-old girl by her adoptive brother. Girlfriend, having recovered from the gunshot, asserted that the allegations were false and that Grandfather had no standing. Grandfather amended his petition in the wake of the objections to allege other incidents of abuse and to assert a right to custody under 23 Pa.C.S. 5325(2). Ironically, that ground as a basis for custody was declared unconstitutional by the Supreme Court while this appeal was pending. See. D.P. v. G.J.P. 146 A.3d 204 (Pa. 2016). The Superior Court notes that Girlfriend did not preserve the standing issue at trial so that it could not be asserted on this appeal. Judge Strassburger dissents on the standing issue but let’s keep our story on track.

Eight days after the shooting, the Trial Court entered an Order granting custody of the daughter to the Grandfather. (Mother’s father). A local attorney was appointed as child advocate and it was ordered that only the advocate could discuss the incident where the girl witnessed his natural mother shoot her adoptive parent.

A two-day custody trial followed. As the Superior Court notes, Grandfather needed to show an unaddressed risk of harm to have standing under 23 Pa.C.S. 5324. The Trial Court concluded that the risk was not sufficient to afford Grandfather the standing to seek custody he had filed to obtain. Accordingly, it granted the Girlfriend’s preliminary objection and therefore, concluded that the best interest analysis set forth in 23 Pa.C.S. 5328(a) was superfluous.

While all of this was awaiting trial, there was no interim custody order. The Trial Court instructed the attorneys and the child advocate to craft some form of physical contact. After two visits totaling 36 hours, the child advocate suspended Grandfather’s access because her directives were not being followed. Shortly after this occurred Girlfriend filed for sole legal and physical custody of both children. Another hearing was held, and in October, 2014 (17 months after the shooting) Girlfriend was awarded sole physical custody of both children. Mother was to have legal custody on a “cause shown” basis if she disagreed with Girlfriend’s legal decisions. All communication between Mother and daughter were to be reviewed and edited by the child advocate.

Grandfather did not appeal but filed another petition to modify which appears to complain about his absence of access. He was afforded another hearing where he expressed concern that the son was physically dangerous to the daughter in Girlfriend’s care. Mother also filed a request for phone contact with her daughter from prison. In August 2015, both requests were denied following another hearing. Postal contact was permitted by Mother subject to control by the child advocate.

Mother and Grandfather appealed. Mother asserted there were constitutional issues at stake as she had a fundamental right to parent. While the Superior Court found her constitutional argument to be fragmented, it did find that Mother’s claims of innocence in the shooting incident should not, alone, prevent contact between parent and child. The standard found in the statute is one of whether there is a “threat” from contact. 23 Pa.C.S. 5329(a) and (d). The Superior Court found that the Trial Court had not devoted enough energy to analysis of what it terms “prison visits” under Etter v.Rose 684 A.2d 1092,1093 (Pa.Super. 1996) and D.R.C. v. J.A.Z., 31 A.3d 677 (Pa. 2011).

A second source of controversy was the level of authority afforded the child advocate. The Appellate Court characterized the advocates regulation of contact between Mother and daughter as “overreach[ing]” and “micromanaged.” The Court concludes that this level of delegation, including the management of all communication between parent and child as improper. The Court notes that the title of “advocate” is not defined and cannot be equated with that of guardian ad litem. The term advocate is found in 42 Pa.C.S. 5983 and relates to involvement of children in the criminal law system as either victims or material witnesses. The advocate is described by the opinion as a holistic approach in contrast to the specific missions of guardian ad litem under 23 Pa.C.S. 5334 or attorney for the child under 23 Pa.C.S. 5335. The Court notes that from the record it appeared that the advocate acted at times as legal counsel and, at other times more akin to guardian ad litem. She appeared as both counsel and witness in these proceedings and was cross examined while testifying. The Supreme Court had decided in an order issued in September, 2013 that the guardian ad litem statute would be suspended to the extent that it required the G.A.L. to be an attorney or permitted “best” interests analysis to be conflated with “legal interests” or permitted the G.A.L. to present witnesses and participate in the trial in any role other than as a witness. The message this rule seemed to telegraph was that if you want to participate in a trial as a lawyer, you proceed under Section 5335. Section 5334 means you will sit, listen to the trial and take the stand to express what you consider to be the best interests of your subject child. On remand, the Trial Court was directed to carefully craft its order defining the scope of the attorney-advocates role.

As for the appeal of Grandfather, it shared many of the waiver problems found in Mother’s appeal. Both were presented pro se and the Court opined that the Pa.R.A.P. 1925(b) statements were not well articulated.

Here the reasoning gets somewhat muddled. Bear in mind that the majority has affirmed the Trial Court ruling that Grandfather did not attain the standard of showing that the children lacked sufficient parental authority and control. So it was motoring under the partial custody standard and doing so because Girlfriend had not asserted lack of standing to seek partial custody in response to Grandfather’s filing. The Trial Court denied partial custody because his desire to have contact with his granddaughter was not in the child’s interest because of Grandfather’s (a) animosity toward Girlfriend (b) his steadfast belief that his daughter was not guilty of a crime when she shot Girlfriend and (c) his efforts to control his granddaughter’s testimony. The Trial Court also felt that Grandfather was inclined to try to sow discontent between Girlfriend and the eleven-year-old daughter (by adoption). The Superior Court finds that there was scant evidence to support these conclusions and while it defers to Trial Courts in these types of analysis, the analysis must be borne of evidence presented rather than supposition. It also held that under Section 5328(c)(1)(iii) the Trial Court must perform the 16 factor analysis that has become a part of all custody determinations.

Specifically, while condemning Grandfather’s use of the term “Adoptive Mother” in the case, the Court did not find this so egregious as to merit suspension of contact. The Court found no record that Grandfather had attempted to discuss or persuade his granddaughter to take a side in the criminal proceeding against her natural mother. This was ascribed to a “supposition” on the part of the child advocate rather than any evidence of record. The Grandfather had attempted to arrange for the child to meet with Mother’s criminal counsel for purposes of an interview but that interview was blocked by a subsequent court order.

In the end, the appellate court expresses concern that Girlfriend is not exercising sufficient control over her son to the possible risk of her daughter. The Superior Court described some of the incidents and believed the conduct between the sibling children involved more than innocent horseplay. Thus, it reversed not only to have a full evaluation of Mother’s rights while incarcerated but Grandfather’s rights under Section 5328(a). This makes for an interesting rehearing, as the law of standing is different than it was at the last hearing.

For better or for worse, this is what “new age” custody proceedings are going to entail; an unmarried couple, who adopt and then split badly, even violently. The children involved present their own issues related to physical conflict. A grandfather tries to intervene and an advocate is criticized both for the nature of her role and for overzealousness in the protection of an 11 year old child. Bear in mind, the circumstance of an adoption is the only thing that bars to two natural fathers from appearing on the scene to add to the mele. Note as well that this action began in November, 2011. It was temporarily settled in August, 2012 but within eight months gunfire erupted, setting in motion a piece of litigation that has subsisted for more than 3.5 years and is headed back to trial. The one child affected is described as “now 12”. That would mean that she was perhaps 7 when her world fell apart.

Note Bene:   We have been longstanding critics of the business of identifying custody litigants and children by initials. The author has been told this is a losing battle. But this opinion, for those willing to endure its 45 page analysis, was a special form of suffering. For 45 pages, here is what one read:

M.G. v. L.D.; Appeal of C.B.D. 2017 Pa. Super 29 (2/8/2017)

L.D.   Mother of M.G.D.. Adoptive parent of E.G.D.

M.G.  Mother of E.G.D. Adoptive parent of M.G.D.

C.B.D. Father of L.D.; Grandfather to E.G.D. and (by adoption) E.G.D.

As I have explained plaintively to any appellate judge who grants me audience, the children in this case are the soldiers in the trenches of modern day custody wars. They are gassed with parental acrimony nearly every day. They don’t read the Atlantic Reporter and their friends don’t either. In this case, two children have lived a life of newspaper headlines and criminal trials culminating in a long-term prison sentence. The least of their concerns is whether their identity is revealed in appellate paper books and resulting opinions. Meanwhile, if called upon to explain the precedential effect of this reported case in a pending case, this lawyer would be required to emit enough letters to daze even a lifetime “bingo addict.” The addict at least has a chance at a prize.

 

Ours is an age where hyperbole has not only become accepted, it is almost universally embraced as a part of American culture, and among the chief advocates of hype is the financial service sector of our economy. We lived throughout the 1980s, 1990s and early 2000s in an age when one could not open a newspaper or magazine without reading the amazing returns on investment that could be achieved by investing with this fund or that. In 2008, when the stock market imploded there was some respite from this enfilade of data on returns. However, as the traditional mutual funds were beaten into retreat, they were quickly replaced by a new creature; the hedge fund. These new investment vehicles promised a faster, better, ride because they would trade with and, when right, against the market. Money fled to these funds despite some enormous loads and aggressive profit sharing demands on the part of the smart guys who established them.

2016 was a watershed. The Dow Jones index grew by 15%; the S&P 500 by 11% and the NASDAQ kept pace at 11%. Meanwhile Barclays Hedge Fund Index barely cracked 6% in a world where the “house” routinely takes 2% up front and 20% of performance. So the 6% hedge fund yield was probably closer to 4%. The three-year average for the Barclays is a measly 3%, making even Treasuries look attractive.

These are the elements of the market that get the hype. And they all have teams of public relations and advertising officials to spin the story their way. However, today’s big news comes from the seldom-heard giants of the investment industry; the defined benefit pension managers. They don’t advertise. In fact, they don’t take customer’s investments. They take public employee retirement contributions and are charged with the duty to make certain the government’s promise to pay monthly retirement payments are actuarially sound.

Today’s news is from CALPERS, the largest public employee pension fund in America. This California agency and its analogues throughout the US manage $3.7 trillion in funds. Their customers are governments that have promised retirees a specified payment every month for life. If they cannot meet their projections, they have to demand that state and local governments pony up larger tax payments to fill the gap. And those governments are already screaming at the large percentage of government budgets allocated to covering pension costs.

So what are the big boys saying? In California’s case, they expect annual returns averaging 6.2% for the next decade. Some years will be better, some worse as the projection is an average. After 10 years, they see returns moving back up towards 8%, but the lower returns in the short run will mean more stress on your local governments to increase taxes.

The Ohio Public Employees system has predictions not much different. 6.76% over the next 5-7 years but then a bounce back towards the 8% that California predicts. Canada and Europe in the past years had lowered their expected returns while the US pension plans retained more flowery predictions. The US plans did not anticipate how far and how long interest rates would crater. The long-term prognosis for higher overall rates of return is premised in large part on a gradual return to historic interest rates.

For public employees, the concern about underfunded defined benefit plans remains. Low rates of return in the past several years have a cascading effect because income projections were not met. The Rockefeller Institute reports that the likelihood of a shortfall in income to distribute is 10x what it was 30 years ago. Subpar returns mean that CALPERS pays out more in benefits today than it receives in retirement contributions. We wrote about this looming problem in May 2016. Recently we spoke with Mark Altschuler who runs Pension Analysis Consultants in Elkins Park, PA. While actuaries, like Mark can project things like present value, it is not within their customary orbit to try to evaluate whether pensions will be able to meet their contractual undertakings to pay each beneficiary the prescribed amount on time.

What does this mean for the divorce practitioner and the client? When looking at the historic rates of return on S&P stocks between 1928 and 2014 the average rate of return today is approximately 10%. Some of that return is consumed by inflation. The other factor demanding consideration is risk tolerance. In March 2000, the SP500 stood at 1,527. It did not return to that value until October 2007. It then fell by more than half and did not return to 1,527 until 2013. The only way to gird against these market fluctuations is to integrate investments in stocks with investments in less volatile bonds. This is strategy that major government pension and annuity managers must emulate. It is also a polestar for conservative money managers. The term “going for broke” can be a self-fulfilling prophecy in the world of investment. So while last year the S&P kicked out 11% and that is 1% more than the 1924-2014 historic average, it would be improvident to build a financial plan exclusively around indexed rates of return. If you choose to believe that kind of growth is sustainable on a long-term basis, we encourage you to read Robert Gordon’s Rise of American Growth (Princeton 2016). So, for the medium term, prepare for 6% returns and be thankful if you do better.

It was the Uniform Gift to Minors Act. Then it became the Uniform Transfer to Minors Act. The goal was the same. To permit parents to set aside money for their children until they attained their majority or to use it for their benefit along the way. A rainy day or a college fund for kids. Seems like a good idea.

Ah, necessity is the mother of invention and the road to hell is paved with good intentions. The last time we visited this issues was in 1993 when Mrs. Perlberger was ordered by the divorce court to reimburse her children’s’ then UGMA accounts.

In Perlberger v. Perlberger, 626 A.2d 1186 (1993) the divorce court found that a custodian had improperly depleted the children’s Pa. Uniform Gift to Minor’s Accounts by expending funds for non-necessities such as family trips, condominium expenses, child care, entertainment, pool expenses, legal representation in custody matters, and the custodian’s own therapy. In her appeal, she contended that the trial court utilized the incorrect standard when it assessed whether to order reimbursement based upon a determination of whether the expense was a necessity. Wife contends the correct standard is whether the expenses were for the benefit of the minor and relied upon section 5305(b) of the Pennsylvania Uniform Gift to Minors Act. The custodian in that case had taken $76,000. The Trial Court ordered that $52,000 be restored.

In Sutliff v. Sutliff, 528 A.2d 1318 (Pa. 1987), the Pennsylvania Supreme Court explained that, unlike a trust which must be used for a stated purpose, PUGMA property and proceeds may generally be used by custodians for the support of children. Id. 528 A.2d at 1323. It is, however, the custodian’s duty to use the [P]UGMA property for the child’s benefit. 20 Pa.C.S. § 5305(b). Sutliff prohibits a parent/custodian from invading the custodial assets to fulfill a parent’s own support obligation where the parent has sufficient means to discharge it himself. 528 A.2d at 1320. It does not, however, bar absolutely a custodian’s use of the funds in relation to a support obligation, court ordered or otherwise. Therein lies the challenge; where is that line drawn?

During the Perlbergers’ separation and divorce proceedings, the children may in fact have benefitted from trips to Washington, D.C. to visit relatives, or vacations and summers with friends at the beach house. “If economically feasible, whatever aspects of the children’s lives that can remain stable, should. The uses to which wife put the custodial assets she borrowed may be extravagant to one of conservative means or taste, but we cannot conclude from the sparse record on this issue that wife’s actions were neither reasonable nor for the benefit of the children. We do not dispute that certain expenditures were an invasion of the custodial assets and clearly were not used for the children’s benefit, i.e., wife’s therapy or legal fees.” Nonetheless, the appellate court agreed with wife’s argument that the trial court imposed its own standard in ordering reimbursement to the accounts. The appeals court remanded expressing. particular concern with the $30,000.00 which was used to pay the mortgage and condominium expenses for the vacation home in Margate, New Jersey. The vacation home was marital property. Wife testified that she paid the mortgage, fees and expenses to maintain the vacation home during the parties’ separation. So, the case was remanded and the ultimate result lost in the mists of time.

Now we have Werner v. Werner, a reported panel decision issued in early October. The Werners adopted two children and, in happier times, funded UTMA accounts for each. In 2009 they separated. It is axiomatic that for almost every couple, physical separation creates economic strain. It is equally true that most parents adopt the view that innocent children should not do without because their parents chose to separate, so we have children who have a lifestyle expectation, coupled with parents who face economic difficulty caused by the need to now fund two homes and an undesignated pot of money that could “bridge the gap.”

Ten months after separation Mrs. Werner, the custodian-mother, withdrew $253,000 of custodial funds and purchased a $235,000 home. A few months later she sued for divorce. The trial court quickly entered an order preventing further use of the UTMA funds.

In August, 2013, the child beneficiaries, then ages 18 and 19, (based on the opinion) sued to secure an accounting. The home purchased with the custodial funds had just been sold for double what custodian-mother paid for it and the court directed that the proceeds be escrowed except for $100,000 made available to mother. When the hearings were held on the claims for accounting and damages, the children also requested that they receive attorney’s fees on the basis that mother’s conduct was in bad faith. After hearing attorney’s fees were denied but the Court directed that the proceeds from the home be paid entirely to the UTMA account even though there was evidence that mother had put some of her own money (not defined) into the home.

While it was clear that the new home had been titled to mother and not the UTMA or the children, mother argued that this was not a breach of fiduciary duty and that the children suffered no harm while provided with a place to stay. She further notes that she could not afford to remain in what was the marital residence. The appellate court notes that one child never occupied the substitute home.

In the end the Superior Court affirmed the Trial Court ruling awarding to the child beneficiaries all of the proceeds from the sale of the home their custodian mother acquired with what was clearly “their money” in 2010 when she made the purchase. Ironically, mother spoiled her own case. First she certainly risked the money by titling the property in her name. Hopefully there was homeowner’s insurance to protect from a casualty loss. But retitling the home deprived the children of the asset protection UTMA otherwise affords. Second, mother kept no records of her contributions to the investment. She described improvements she paid for to the home but did not prove the value of those improvements. So, ironically, she doubled the value of the accounts through her somewhat risky investment but had to pass on all of the benefits, losing her contribution to it along the way.

The other tipping point that may have played into this was the fact that the children were 15 and 16 years of age when she drew the funds in 2010. Mother knew that college was not far away and the opinion tells us that the children had to essentially self-fund college while this case was decided because of mother’s investment choice. She did sell in 2013 which may have been undertaken to convert to cash and pay tuitions. The children’s’ suit intervened.

The children cross appealed claiming attorneys’ fees under Section 5319 of the UTMA or Section 2503(7) of the Judicial Code (Title 42). Mother’s response had been that she had not acted improperly. The Trial Court refused attorneys’ fees because the conduct of mother was not egregious. The Superior Court agreed and added that while mother’s legal positions were not commendable, they were not “legally untenable.” Pregnant in the ruling was the fact that the $250,000 UTMA account had appreciated by 15% per year from 2010 to 2015. Of course, the money would have doubled in an S&P index fund during the corresponding period.

The problem here is that we still don’t know where the line is drawn. Is it acceptable after separation to rent the same seashore cottage that was part of family lifestyle while the marriage was intact? If father won’t provide a car either alone or on a shared basis with mother, is it suitable to use UTMA funds to buy a car for a minor? The opinion in this case makes reference to an intention to use the funds for college. (fn 1). But UTMA does not really address that issue. And if a mature child is clear that he or she has no intention to secure post-secondary education, does the standard of how money is used become more lax. Obviously, the standard does not. But will the fiduciary be judged differently if post-secondary education is not in the cards? These are very real questions that attorneys and clients grapple with every day. Unfortunately, the appellate cases decided seem to provide little guidance. Meantime, we may be guided by the sage advice of Sergeant Esterhaus when his wife tapped the UTMA to pay for the scuba trip to Bimini: “Be careful out there.”

 

 

 

 

 

 

BLOG PIC

Just days before a separate panel of the Superior Court held that Pennsylvania courts may assume jurisdiction to dissolve civil unions, Judges Gantman, Bender and Panella issued a published opinion, In re Adoption of R.A.B., Jr., holding that an adult adoption consummated in July, 2012 could be annulled or revoked. 2016 Pa. Super. 295. The opinion was published on December 21, 2016.

In April 2012, 76-year-old Roland Bosee petitioned the Allegheny County Orphans’ Court to permit him to adopt his 40+ year life companion, Nino Esposito. Mr. Esposito was then 65 years old. The adoption was granted.

The stated purpose of the adoption was for these gentlemen to form a family relationship in a world where they could not marry in Pennsylvania. When that law changed in 2014, Mr. Esposito filed a petition to revoke the adoption. As one might suspect, his companion did not oppose but the Orphans’ Court dismissed the petition on the basis that there is no precedent to revoke or annul these proceedings. The Superior Court citing a 1957 Somerset County case, Adoption of Phillips, decided that adoptions may be revoked for good cause premised upon general principles of equity. 12 D&C 2d. 387, 396-97. See also Adoption of Hilton 2 D&C 2d 499 (Montgomery 1975) aff’d 369 A.2d 728 (Pa. 1977). The appellate court also noted family court precedent in both Delaware and New Jersey permitting such a proceeding where the stated goal was marriage.

The Allegheny County decision was reversed and the case remanded for the purpose of entering an order terminating the adoption.

We note that there is room for mischief here and in so doing we do not suggest that the litigants in this case having any such motive. Suppose one of the parties in a similar situation elects not to proceed with the marriage? Does the other party have the right to vacate the order vacating the adoption? The family courts have seen a marked uptick in cases where adult children are being asked to support their elderly parents? Is the revocation of an adoption a possible avenue to avoid that kind of support? Adult adoption is an area where courts need to proceed gingerly both in terms of their establishment and their revocation. Motivations are not always what they seem. Adoption was not recognized at common law and most laws in America and England have a little more than a century of precedent. These laws were created at a time when adult mortality was far higher and people were looking for a better solution to the orphan trains that carried 250,000 children to the mid-west between 1850 and 1920.

Not terribly exciting but evidence rulings are hard to find and ones where a family law ruling is reversed based on evidence used by the trial judge are especially rare.

Johnson v. Johnson 2016 Pa. Super. 294 is a published panel decision where the issue was whether Father needed to continue to support an adult child. The law in this area is made murky by the statute (adults “may be liable” for continuing support: 23 Pa.C.S. 4321(3)) but clarified by the case law holding that there must be a disability which prevents the adult child from engaging in profitable employment at a supporting wage by reason of mental or physical limitations. Hanson v. Hanson, 625 A.2d 1212 (Pa. S. 1993).

Father petitioned to suspend support. Mother defended on behalf of the child. The burden is on the child to prove that disability prevents employment and justifies continued support. Verna v. Verna, 432 A.2d 630 (Pa.Super. 1981). In holding that Father had a continuing obligation the trial court noted that it was not presented with current mental health testimony. While cautioning itself that the doctrine of judicial notice does not extend to records admitted in another case (Naffah v. City Deposit Bank, 13 A.2d 63 (Pa. 1940), the Trial court did note that 13 years earlier the court had found the child suffered from a schizotypal personality disorder. It then concluded the evidence currently showed that this disorder continues even though expert support for that conclusion was not in evidence.

Lacking expert testimony and faced with medical records which were not properly authenticated, the Trial Court denied admission of the records. But then, as noted, the trial court decided to indulge in a review of the 2002 evidence and ruling on the same subject. The court also secured its own copy of the Diagnostic and Statistical Manual of Mental Disorders (DSM) and perused that in reaching its conclusion that the disability was continuing.

The Superior Court reversed. The trial court is confined to what was presented at the hearing; not what was contained in the court file even though that evidence may have been properly admitted in 2002. The Superior Court cited Eck v. Eck, 475 A.2d 825,827 (Pa. Super. 1984) for that proposition. The appellate opinion also mentions that even though it denied admission of the newer records of treatment based on failed authentication, it referenced these records in its opinion. This also was error and the case was remanded for further determination.

The case has a number of interesting issues. If the child had the burden and we assume the Mother was acting on her behalf, why is there a remand if the burden was not met? Should this not have been a vacate order instead of a remand? One suspects that mother may have gotten a “bye” here and that she is now on notice to either secure a current expert opinion or at least work on getting the current treatment records admitted when the trial court resumes jurisdiction.

The standard for continuing support is also ambiguous although the Superior Court notes that the remand nullified the need to address that substantive issue. The opinion references the standard of adult child support as whether the child is too “feeble physically or mentally to support itself.” Com. ex rel. O’Malley v. O’Malley, 161 A. 883 (Pa. Super. 1932). It also quotes Hanson v. Hanson, 625 A.2d at 1214, where the standard is termed “impossibility of employment.” The trial court said the standard was whether the child could be “profitably employed” and whether “such employment is available.” Setting aside the insensitivity of the language used in O’Malley, that case talks broadly about self-support. Today, we see adults with physical and mental disabilities in more and more employed positions many of which are crafted to accommodate those limitations. They can earn some money but it may not be enough, even when supplemented by transfer payments. Is there still a support obligation if it is not “enough?”. And how much is “enough?” The current self-support set aside found in the state support guidelines finds that an adult earning less than $931 per month net is presumed unable to contribute to child support. Pa.R.C.P. 1910.16-2(e)(1)(C). Effectively this means that any person earning minimum wage and working full time is not only self-supporting but able to contribute to support of his/her own child. It would stand to reason that such a person is therefore ineligible to seek support from a parent upon attainment of majority at 19. Is this a hard and fast rule? Would it make a difference if the parents had enormous income of their own? The law in this area has a mid-20th century tinge that could stand for some 21st century judicial clarification.

In what some may construe as an effort by the Pennsylvania Superior Court to salvage something positive out of 2016, an Opinion was issued today which effectively opens Pennsylvania’s family courts to dissolve out-of-state civil unions

The matter of Neyman v. Buckley (No. 2203 EDA 2015) arose out of Philadelphia County.  The parties were attempting to have their 2002 Vermont civil union dissolved in the Philadelphia Family Court.  The trial court, however, dismissed the divorce complaint related to the civil union on the basis that it did not have jurisdiction over the action.  The trial court based its decision on statutory language which established the court’s jurisdiction to divorce parties from the “bonds of matrimony” and, therefore, could not issue a decree or order dissolving the out-of-state civil union.

The other problem in this case, was that Pennsylvania County examined the Vermont code and saw the procedural separation between dissolving civil unions and marriages. In short, Vermont retained a legal distinction between marriages and civil unions, though they gave them the same rights and access to the family courts. It was on this basis that the Philadelphia court dismissed the complaint to dissolve the civil union and noted that the action sounded more specifically in the civil trial division (i.e. address the civil union as a contract).

Neither party was contesting the dissolution of their civil union. They entered into the union in July 2002 before same-sex marriage was legal and began living separate and apart five months later in December. Since then, they have been living in legal limbo without having residency in a state to dissolve their union or access to the court’s due to Pennsylvania’s Defense of Marriage Act (DOMA).

Many family law practitioners, myself included, have successfully dissolved civil unions in some counties, but those courts which did so in some ways hindered the clarification of this issue. Despite the decisions legalizing same-sex marriage and invalidating Pennsylvania’s DOMA, the state legislature has not updated the marriage and divorce codes to account for the new law of the land. Without legislative action, it would be the appellate courts which would shape the law and offer some precedence to clarify the question as to what types of unions can be addressed by the family courts.

Within this context, the Philadelphia court, in denying the dissolution of an uncontested, no economic issue case, did Pennsylvania law a tremendous favor: it created a test case for which the Superior Court could weigh the argument offered by the trial court and conclude that, “the legal properties of a Vermont civil union weigh in favor of recognizing such unions as the legal equivalent of marriage for purposes of dissolution under the [Pennsylvania] Divorce Code.” Citing prior case law (Himmelberger), the civil union has a distinct “odor of marriage” and that the only substantive difference between a civil union and a marriage are “sexual orientation and semantics.”

The strong Pennsylvania public policy in favor of granting comity to another state’s laws so long as they do not contradict those of the Commonwealth was also cited by the Superior Court.  Pennsylvania family courts “must recognize their Vermont civil union as the legal equivalent of a marriage for the purpose of dissolution.”

Accordingly, the Superior Court reversed the Philadelphia County dismissal of the complaint and remanded it back to the Family Court to be addressed under Pennsylvania Divorce law. Practically speaking, this decision means issuing a Decree dissolving their civil union upon application by the parties and unambiguously establishing the Family Courts as a venue for dissolving civil unions.

 

 

When this writer first began to practice matrimonial law in 1982, the period after November 1 of each year could be termed the “Quiet Time.” In those days, once Halloween had occurred people decided no matter how bad their situation, they would tough out the holidays of Thanksgiving and Christmas or Chanukah. They did so in order to minimize the disruption on their children, who justifiably saw the holidays as one of joy and family unity.

It is different today. In recent years we have been asked to do initial consultations even during the third and fourth weeks of December. This seems very odd but I have concluded that the arrival of year’s end and the holidays prompts people to take stock over the state of their marriages and to ask the difficult question: “Is this working?” And if that question prompts a negative reply it leads to the more difficult inquiry: “What next?”

Truth of the matter is that these are and should be very troubling questions. In 1980, when Pennsylvania became a “no fault” jurisdiction, the fear was that no fault would cause an explosion in the number of divorces and irrevocable damage to the institution of marriage. Thirty-five years of statistical data have shown that the explosion in divorce never occurred. Ironically, if there is an objective measure of how marriage was affected, it is shown in the number of people who decide to marry. The numbers tell us that divorce is down. But marriage is way down.

Meanwhile, the interviews we provide to people in November and December of each year tell us something more interesting. Most people we meet are clear that they don’t want to file for divorce or even start the process before 2017 arrives, but they are clearly troubled by where marriage has brought them and they want to know what divorce would mean for them and for their children.

They ask excellent questions. Many of these questions are economic. Those are easy because our lawyers have lots of experience with this kind of thing. But then we have lots of inquiries about their children and how they will be affected. Unlike money, children are tough to measure, especially from a distance. Obviously divorce is much more prevalent than it once was. So kids understand divorce in one sense because many of their classmates have had firsthand experience. But observing the divorce of your best friend in school is quite different than the firsthand experience of seeing your own parents dissolve the only marriage you have ever known close up.

From a distance we can say that children respond differently. Some kids seem completely unaffected by the breakup of a marriage. Others are profoundly affected. Age has little to do with it. We have witnessed eight year olds who tolerate their parents’ divorce as if it were a minor event while their seventeen-year-old brother is devastated.

In an odd twist we are also often asked by prospective clients whether they should divorce. Obviously, there is no objective test providing a definitive answer. What we do experience a fair measure of is an effort to evaluate whether personal happiness should be foregone “for the sake of the children.” In other words, should I just accept a miserable marriage for the next 10, 12, 16 years to spare the children the anguish of divorce.

This is a place where lawyers need to tread lightly just as physicians do in the world of pain management. Some of us pass out at the sign of blood. Others have survived being awake and alert during the amputation of a limb. Some people expect very little from marriage and don’t deeply experience the pain associated with a bad one. Their neighbors can become depressed to the point of self-harm by the same stimuli. So be wary of any attorney who has strong opinions either for or against your marital situation. They are not the patient in distress. You are.

Meanwhile, here are the questions you need to ponder when you feel the strong need to move on.

  1. How will each of my children be affected? If you ask a child whether he or she would want to see you separate, chances are that they will say they are against it. But then ask yourself, how much anxiety does this child experience living in a household where two parents no longer like each other. Many parents pretend that their children don’t know about the level of parental discord. Perhaps true but experience has taught me that it is the full time job of children to observe, evaluate and manipulate their parents during the 18 hours per day they are not in school. Don’t underestimate them.
  2. How will you be affected by sentencing yourself to another five, ten or fifteen years of unhappiness? For most of us, the damage of living in an unhappy marital situation is cumulative, just like smoking.
  3. Not that you care, but what is the effect on your spouse of living the “lie” for the same period you are. Perhaps you have a higher pain threshold. But when people are forced to live together while not liking each other, the effect is often more frequent and more serious “bad behavior.” Your children will witness all of this while you both tolerate it.
  4. What is the lesson the children get from a state of lasting armistice? Are you and your spouse each depriving yourselves and your children from experiencing marriage as a happy relationship? Many clients profess that they will never marry again so that the question is moot. Meanwhile our experience shows that most will move on to other relationships which provide differing degrees of satisfaction. But a question you have to grapple with is whether you would want your children to have a marital relationship similar to yours. Obviously, there is a faith element to this question. If you view marriage as a contract having divine qualities, the question may not require an answer at all. A higher being has determined that you will and should remain together and that this is required.

It is clear that the arrival of years’ end does prompt many people to evaluate the state of their marriage and its future prospects. Attorneys can provide useful answers to the worldly questions of how property division, custody and support issues work. But imbedded in these questions are far greater ones; questions for which lawyers cannot and should not pretend to have easy answers.

We live in a day when reported (i.e. precedential) decisions are rare and decisions touching upon important philosophical differences are like hen’s teeth. But on November 18 the planets aligned to give us Hanrahan v. Bakker, a 2-1 panel decision with Judges Ford Elliott and Dubow in the majority and Jenkins in dissent. The subject; how much child support is “enough” when the combined incomes exceed $15,000,000.

We have seen this before. Branch v. Jackson involved a major league baseball player. In that case there was a large support order and money deposited in an UTMA account for an unspecified “later.” This writer was troubled by support paid into trust because that really does transfigure the basic premise of the income shares approach to child support. But the result could be explained when one sees that the average career span of a baseball player in the majors is about 5.5 years. Statistics tell us that the rainy day is coming and that for professional athletes there is rarely a “second act.” Meanwhile we know that childhood is 18 years by law.

Hanrahan is different. Both parties are lawyers sharing physical custody of two children. Mother earned approximately $105-180,000. Father’s earnings as a specialist in corporate takeovers with an established Wilmington law firm ran a gamut from 1,083,000 in 2010, $4,010,000 in 2009; $2,303,000 in 2011 and $15,592,000 in 2012.

The parties divorced in 2009 after 17 years of marriage. The opinion references but does not describe income or lifestyle during the marriage. The property settlement agreement called for an annual exchange of tax returns and an annual adjustment of support based on net income and Pennsylvania guidelines. It also contained a counsel fee provision should there be a breach of the agreement.

All proceeded smoothly in 2009 which is to say the calculation was done and the support adjusted to $15,878 per month. In 2010 father’s income declined sharply but again they followed the guideline formula and support fell to $3700 a month. In 2011 Father’s income was $2,303,000 and the support was calculated as $7,851 per month.

2012 was the year the mold broke. With $15,600,000 in income and mother’s reported as $105,000 Father wrote to Mother stating that he ran the calculation but that the number was “way beyond” any realistic reasonable needs. He also generously proposed not to reduce the support below $7,851 per month. It should be noted that Father also covered about $6,000 a month in tuitions, camp, and activities in addition to the support specified by calculation.

To complicate matters Father also took $2,500,000 of the 2012 earnings and clapped it into an irrevocable trust for the children. As if that doesn’t make it complex enough, the partners of his firm agreed to fund a scholarship in honor of the law firm’s founding partner. The “contribution” to this cause for Father was $150,000 but the firm reimbursed him for the contribution.

As one might expect, $14,000 a month in support and direct payments did not seem adequate to Mother and she filed to enforce the agreement. Father filed an unspecified counterclaim and the matter was heard in January, 2015. Over Father’s objection that the income level made the guideline presumptive amount under Pa. R.C.P. 1910.16-3.1 absurdly unrealistic, the Delaware County Common Pleas Court came back with an order ranging from $52-59,000 per month from May 2013 through April 2014. But the Court simultaneously ordered Mother to deposit $30,000 per month from that sum into Uniform Transfer to Minor Act accounts for the children where she would act as custodian. It also found that Father had breached the agreement and made an award of attorneys’ fees pursuant to the agreement. Both parties appealed.

Mother’s appeal settled on the issue of putting the support money into an UTMA account. Her argument was that every other support order in Pennsylvania affords a recipient unfettered access to the support awarded. On this subject the majority agreed, noting that children should not be made to wait for child support and that UTMA is a gifting mechanism with a trust aspect in contrast to child support which is an obligation of parenthood. The UTMA statute declares that these “gifts” are not a substitution for child support. 20 Pa.C.S. 5314(c). The UTMA funds are secondary to the underlying duty to support from current resources. Sternlicht v. Sternlicht 822 A.2d 732,737 (Pa.Super, 2003) aff’d 876 A.2d 904 (Pa. 2005). That aspect of the order was reversed.

The trial court had made a downward deviation in the support amount by reason of the $2,500,000 Father had deposited into trust for the children. Mother asserted that this also was an unwarranted intrusion into the support formula. The trial court had reviewed the deviation factors under Pa.R.C.P. 1910.16-3.1(a)(3) and concluded that the trust was a “relevant factor” warranting deviation. Here the Superior Court again relied upon cases noting that the support obligation was not reduced because of the child’s own property. This contribution was made voluntarily at a time when Father knew he had a child support obligation. See Portugal v. Portugal, 798 A.2d 246 (Pa. Super, 2002)(a parent’s voluntary retirement contributions are still income available for support). The downward deviation was reversed.

On the counsel fee award, the trial court had found this to be a reasonable dispute and not a breach of the agreement. The Superior Court disagreed finding that Father covenanted to pay according to the guidelines and that his position that the guidelines were now absurd or confiscatory was without legal basis. This denial of fees was also reversed.

Father’s appeal starts with a claim that the 1994 decision in Ball v. Minnick, 648 A.2d 1192 (Pa. 1992) somehow eliminated reasonable needs as a standard for support. The Superior Court held that guidelines and the rebuttable presumption of their applicability had been part of a statutory scheme approved by Act 66 in 1985 and remained the law. The income shares model had been adopted in 1989. Ball v. Minnick had established that where the guidelines stopped (then at $10,000 combined net income) the formula of Melzer v. Witsberger, 480 A.2d A.2d 991 (Pa. 1984) would prevail. But Ball was overruled in 2010 by adoption of Pa. R.C.P. 1910-3.1 which stated that all support cases were to be first analyzed through an income shares model after which the courts could evaluate whether deviation was appropriate. Father placed his reliance upon use of the terms “reasonable needs” in the statutory framework of 23 Pa.C.S. 4322. But the Superior Court responded that the guideline formula adopted in the Rules was the formula adopted for determining reasonable needs. It further noted that reasonable needs were not a deviation factor specified in the existing rules.

Along the same lines Father asserted the deviation was appropriate because this support result was an aberration of the standard of living of the parties. Pa.R.C.P. 1910.16-5(b)(7). He also borrowed from the trial court’s reliance on “other factors” to deviate. 1910.16-5(b)(9). The trial court appears to have followed the rainy day reasoning of Branch v. Jackson. Essentially, the argument there was that funds needed to be set aside for a day when incomes were likely to be reduced. The amended trial court order referenced the children’s’ post majority needs. The analysis here seems somewhat muddled but the clear import is that post majority needs and standards of living are not part of a child support analysis.

What makes this case interesting is not so much the result but the trend. We are seeing lots of disparity in annual earnings on the part of more and more people. In this case, even Mother’s income varied markedly. The support amount (excluding the add ons) over three years varied from $3,700 to $59,000 a month. Assuming a caring, honest and intelligent recipient what is that person to do. We can hope the payee would not spend every dollar received, but we are trusting that the right thing will be done with some fairly astronomical levels of child support. If the payee took the excess over the mean level of support (roughly $8300 a month) and purchased a $500,000 home with the excess cash accumulated over the 12 months of “surplus” whose house is it when the children are emancipated.

When large sums like that in Hanrahan come into play, would it not make sense for the court to appoint a guardian ad litem to at least make some suggestions or perhaps ask some questions. Certainly this should not be an appointment to wrest control of the support from the payee but we have all heard the stories, whether apocryphal or not of fortunes wasted on cashmere socks and fast cars. As a business lawyer Mr. Hanrahan probably still has a few more seasons in the big leagues of mergers and acquisitions. But wide receiver Michael Jackson was drafted in 1991 and finished in 1998. We don’t know how Ms. Branch’s children by Mr. Jackson ended up but even the best of us certainly would be tempted to think that the father of her children might become the next Jerry Rice (20 seasons). If the money we call child support really is for the kids, some caution should be taken in circumstances where the income level is erratic and the source fleeting. A GAL would be money well spent to assure that children do not ride the road from rags to riches back to rags when that calamity could be avoided.

The dissenting opinion of Judge Jenkins would go even farther. She believed that a downward justification was warranted based upon the funding of the trust and she also approved of the notion that it was in the best interests of the children for funds to be segregated into a UTMA account.

I was researching material for this blog when courtesy of some “cookie” embedded in a website, I was treated to an opportunity to save substantially on my divorce legal fees by signing on for a service that offered me “al a carte” divorce services by law firms standing by to help me without the “unnecessary” cost associated with full service divorce representation. Sounds appealing, right? Why buy the whole car when only the tires need to be replaced?

So as the reader has probably already surmised, this piece is being written by one of those pricey full service divorce lawyers. Thus, as the Latin’s would say Caveat emptor (let the buyer or in this case the reader, beware).

The typical person in an unhappy marriage faces a myriad of issues. Custody. Division of property and the debt that accompanies it. Division of future assets like pensions or other retirement plans; child support; spousal support; alimony; health insurance; life insurance. The list goes on but you get the point.

If each of these issues was wholly independent of the other, a la carte divorce services might make more sense. But, that is usually not the case. So let’s take custody. That should be an easy topic to sever from the rest, right? Kids are not for sale and so money issues should not really tie into custody.

Well, not so fast. Do you have primary custody? Then you will probably be a head of household for tax rates and you will be able to deduct the kids on your return even though the other parent contributes more to child support than you do. Do you have shared custody? Then your tax treatment is probably going to be different. Do you have the kiddies more than 146 nights per year? Then your support is subject to adjustment. If you have primary custody of minor children that’s a reason why you should get a greater percentage of the marital estate. At least that’s what the statute says. Spousal support and alimony pendent lite (which is to say spousal support with a Latin spelling) are calculated differently if you are getting child support and you get child support because of how much custody you have of your children. The parent with primary custody will want to ask whether there is life or disability insurance should the other parent experience disability or its more lasting cousin, death.

So you hire a la carte lawyer to help you draft a custody stipulation. Is that lawyer also going to assess and advise on the issues I just described? You want to say yes but you know better.

Let’s use property division as another example. Mother keeps the house subject to the mortgage because she will have primary custody. Do you want Mother to refinance the house to get your name off the mortgage or are you OK with having an extra $200,000 in debt sitting on your Experian credit report for a house that’s now in her name? And if Mother takes up with Mr. Loser and together they decide not to pay the mortgage on that home where the kids live, do you know whose credit rating is going to be dinged and who might be liable if the house sells for less than the principal balance due in foreclosure? One guess only.

In fairy tales, everything turns out right. That’s why you don’t read a lot about lawyers in books by the Grimm Brothers or Hans Christian Andersen. Lawyers came about because things go wrong. Like the parent who signed up to pay for his kids’ college in 2006 thinking that he had a solid job paying him $200,000 a year. He loved his kids and with $12,000 a month in after tax income he felt confident that he could afford it. But then came the Great Recession and it has now been eight years since he cracked $140,000 a year in income. Meanwhile his loving children all chose to go to private universities and so far they have averaged 6 years to complete a four-year program. He didn’t need a lawyer, right? So now he wanders the streets with a $250,000 judgment accruing interest at 6% that has almost no chance of being addressed in a bankruptcy. A lawyer might have suggested capitating the cost of enrollment, the length of enrollment and a failsafe provision in case he lost his job. But, this 21st century Dr. Pangloss trusted that all would be well.

Some readers will call these war stories a form of fear mongering. Bad things don’t always happen. The entire life insurance industry is built around the premise that in any given year only a small fraction of people actually die. Only a small portion of legal agreements blow up in bad ways. But when they do, they can inflict a lifetime of financial pain. The trouble with on line or over the phone legal advice is that you’ll never be able to find the lawyer or algorithm that gave it to you when it turns out badly.