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Pennsylvania Family Law

Updates, Events & Useful Tips Surrounding Family Law Issues

Number 18: Really?

Posted in Practice Issues

Each month we get a report from our own marketing folks on how many people read and subscribe to our blog. On June 29, we received an email from Adelaide in South Australia in which a law firm has taken the time to evaluate the 100 best divorce blogs in the world.  It was a bit of a shock that someone actually tracked 100 blogs and attempted to rank them but we can happily report that we ranked No. 18 in the WORLD.  We were praised for “Fresh and useful posts, regular updates and a professional approach to a common situation.”

“They Lied: Make Them Pay”

Posted in Practice Issues, Protection from Abuse

For those who practice in the domestic relations world, one of the great frustrations comes when a client asks us to extract a sometimes appropriate pound of flesh as compensation for the “pack of lies” contained in a divorce related court pleading. Although it comes in an unpublished opinion the July 14, 2016 opinion in Morley v. Collazzo, the analysis contained in Judge Patricia Jenkin’s opinion merits attention because it explains what “lies” are compensable and which are not.  2852 EDA 2016.

For a bit more than three years the parties were involved in a romantic relationship. It ended in early spring, 2013.  A few months later, a senior executive at girlfriend’s employer began to receive anonymous mail that included nude photos of the girlfriend accompanied by letters alleging that she was guilty of larceny and illicit use of opiates.  Girlfriend, when notified of this correspondence filed a police report.  She next filed a Protection from Abuse claim.  The PFA claimed that boyfriend was the source of the letters to the employer, that he had revealed details of their sexual relationship at a local bar and had demanded sex from girlfriend.  It was also alleged that the boyfriend was depressed and that he was verbally abusive.  The appellate decision waffles on the next question of “What result?” stating only that a temporary order was entered.  One must infer that the PFA must have been withdrawn.

Almost a year later, boyfriend filed a defamation case including claims of false light and abuse of legal process. Girlfriend filed objections challenging the complaint on the basis that her court pleadings were absolutely privileged whether true or not.  This prompted boyfriend to file an amended complaint suggesting that her pleadings were published outside of Court and that there was a wrongful use of civil proceedings.  Girlfriend renewed her preliminary objections but these were overruled in early 2015.  When girlfriend filed her answer to the tort complaint she again asserted that her pleading was privileged and true and did not proximately cause any injury to boyfriend. She also included an abuse of process claim of her own.  With pleadings closed boyfriend noticed girlfriend’s deposition and demanded all correspondence she had with a state agency that licensed her and all correspondence with her employer.  The response was a protective order request saying the documents were not relevant.  This protective order was granted.  Next came a motion for summary judgment by girlfriend.  In August, 2015 the motion was granted.

Boyfriend appealed, claiming that the protective order precluded him from access to evidence that might otherwise have proved his case.

The standard here is error of law or abuse of discretion. The sum of the appeal is built around Pa. R.C.P. 4011 which precludes discovery that is either irrelevant or not having a proper purpose.  The Superior Court recites that discovery matters are to be resolved by the trial courts and that reviewing courts will employ an abuse of discretion standard.  No abuse found here.

As for whether the content of the abuse pleading was defamatory the court noted the 2012 decision in Richmond v. McHale, holding that statements by judges, attorneys, witnesses and parties made in the context of judicial proceedings are absolutely privileged.  35 A.3d at 784 (Pa. Super).  From the Superior Court opinion it appears that girlfriend may have told her friends that boyfriend had sent letters to her employer and that she feared for her life.  The appellate court found nothing defamatory in those statements.  The plaintiff also had filed for a claim under the “false light” theory of invasion of privacy.  This tort occurs where the fact related from one party to another about a third may be true but there were no bona fide reasons to publish the fact to third parties except to make a false impression. Krajewski v. Gusoff, 53 A.3d at 806 (Pa. Super. 2012).

Lastly the courts disposed of the wrongful use of civil proceedings claim under 42 Pa.C.S. 8351. The Superior Court affirmed the trial court finding that there was nothing grossly negligent in the filing of the Protection from Abuse claim. The statute requires that in order to recover the petitioner seeking relief has to have proceeded for a purpose other than prosecution of a legitimate legal claim.

The takeaways? Clients need to understand that a litigant can say just about anything in a court pleading without fear of liability although the allegations in girlfriend’s Protection from Abuse complaint test the outer limits of relevance in the context of 23 Pa. C.S.A’s 6102’s definition of abuse. At the same time, they also need to be reminded that faxing a copy of their complaint to the local newsroom or even bringing a copy for the family to review after Thanksgiving dinner has no privilege associated with it, even though the document has been time-stamped as a judicial document.  Recall the ruling in Post v. Mendel, where a lawyer’s post trial missive to a judge attacking the trial conduct of his adversary prompted the Supreme Court to observe that not all communications with the court are immune from liability for defamation.  Abuse of process requires the instigation of legal action with a corrupt purpose for which it was not designed.  Wrongful use of civil proceedings is an action filed for which there is no good faith basis.

 

 

 

Guns & Domestic Violence; The US Supreme Court Grapples With Voisine v. US

Posted in Practice Issues

This writer only wishes he could wear the mantle of constitutional scholar. The best he can do is claim the appellation: constitutional observer.  Today, I picked up the majority opinion decided by Justice Elena Kagan with the intention of reporting upon how the Court interpreted Maine’s domestic abuse statute in the context of the federal crimes code and its generation long prohibition against allowing persons convicted of misdemeanors of “domestic violence” from possessing a firearm.

There are few subjects of greater controversy today than whether the second amendment can or should have limitations. This is not the place to vex that issue.  My intention was simply to report upon how this 4-2 decision would affect Pennsylvanians.  But that can wait another day. What captured my eye and my imagination today was how the highest court decided this case and what politicians of all stripes can learn from the rather oddly structured institution we call the Supreme Court of the United States.

Today’s decision has two dissenters. Even they do not agree on all points but when I saw that the dissenters were Justices Thomas and Sotomayor, I could not help but race to read the dissent crafted by these two politically disparate individuals.

The dissent is written by Justice Thomas. The term “domestic violence” is one pregnant with judgment.  Congress attempted to limit that term by stating that before a gun would be denied to a person convicted of a misdemeanor involving domestic violence, the violence had to involve the use of “physical force” or an attempt at same. 18 U.S.C. 921(a)(33)(A).

The case decided today has a history. It has been to the Supreme Court before in the form of Armstrong v. U.S. 572 U.S. (2014).  The Supreme Court had remanded the case and it came back this time as Voisine v. U.S. with the question being whether a misdemeanor conviction based upon “reckless” rather than intentional assault in domestic violence setting was sufficient to deny the misdemeanant the right to a weapon under federal law.

Kagan’s majority opinion offers a wonderfully useful paradigm. If a gun owner slips while washing a plate and the plate shatters hitting and cutting his spouse, he may have been negligent but he cannot be said to be reckless.  If, however, in a fit of anger he throws the plate at the wall and it happens to hit and cut his spouse, he has now acted recklessly.  People who throw plates intentionally must accept the fact that their act is reckless and can do substantial harm.  That is a use of force that warrants removal of gun rights if the spouse is harmed even though the intent to harm itself was never shown.  The majority opinion says that if a defendant loses his grip on a door such that it strikes his domestic partner in the face, he has not employed physical force.  But if his anger causes him to slam the same door and it happens to strike her in the face, his reckless behavior is physical force sufficient to allow courts to revoke second amendment freedoms.  The majority concludes that reckless conduct is “no less” forceful than conduct undertaken knowingly and intentionally.

This is where strange bedfellows Thomas and Sotomayor jump out of the semantic sack. They reply that the angry plate thrower and the door slammer knowingly unleashed physical forces but observe that by definition, their conduct did intend harm.  But the harm was directed at inanimate objects.  To “use force” means to intend the force as a device to punish or control the conduct of another person.  The door slammer and plate thrower described by the majority are not using force.  As the dissenters put it, the majority conflates volitional conduct with intentional conduct. An intentional act is designed to inflict harm.  A reckless person acts in derogation of understandable risk.  To the dissenting justices the term “use” coupled with “force” means with the intention to cause harm, not merely conduct that happens to cause harm.

All of us know that we live in polarized times when it becomes more and more difficult to “reach across the aisle” in search of understandable consensus. We also know that there are few issues more polarizing than gun rights; a fact borne out by the votes in Congress last week following the tragedies in Orlando, Florida.  What is remarkable about this ruling is the fact that on this most important of constitutional issues a Bush Republican and an Obama Democrat would set aside ideological differences to find common cause in the language we call “English.”  It is what makes the Supreme Court as crafted by Justice John Marshall, a fascinating institution.

 

 

Interest On Overdue Support Arrears; A Reform Worthy Of Real Consideration

Posted in Practice Issues, Support

One of the things the Pennsylvania Bar Association makes a part of its mission is to review and, where appropriate, comment on legislation introduced for consideration by the General Assembly. These proposed laws cover a large swath of public policy territory.  Earlier this year the legislature passed a bill creating a presumption of consent to divorce where a violent crime had occurred between spouses.  Today there is a bill to reduce the separation period required to obtain a consent divorce from 2 years to 1.  It may well pass before the end of the month. There is another bill to affect how custody proceedings may change upon a parent’s military deployment.

The Family Law Section was recently asked to comment on House Bill 1975, a bill introduced by Representative Todd Stephens of Montgomery County and 18 of his colleagues imposing interest on support arrears. While this writer sees limitations in the bill as currently drafted, the subject is one that certainly merits legislative consideration.

The nub of the problem can be described as follows: Two parents separate on January 1, 2016 and parent A has primary custody of their child.  Parent A applies to the court for a child support order and on March 1, a conference is held and an interim order of $1,000 a month is issued.  The Court instantly attaches the wages of Parent B and the matter is referred for a hearing to establish a final order.  That hearing takes place on June 1 and a decision is rendered setting support at $2,000 a month on June 30, 2016.  This means that the support account would be set at $12,000 (6x $2,000) against which there would be credits for the $4,000 for those payments collected under the interim order (Mar, Apr, May, Jun).  Thus the account would show what lawyers call an arrearage of $8,000.  The technical legal term is called “past due support.”  When it enters a final order, courts are also supposed to address liquidation of the past due support.  Typically, courts add 10% to the order to reduce the arrearage over time.  An award of $2,000 would be increased to $2,200 per month with $200 being applied to eliminate the $8,000 arrearage.

Those facile at long division and the “time value of money” will see the immediate inequity. Parent B paid no support for two months and half the correct amount of support for the next four months while the final order was being decided. At $200 per month it will take 40 months to pay off the overdue support.  At the legal rate of 6%, the interest that should be applied to this payout would be about $48 per month or $1,920.  But under prevailing law, Parent B gets the payout interest free.  So, the effective rate of the payout is not $200 a month but $152.

House Bill 1975 does not change this if Parent B unfailingly remits $2,200 per month as the June 30 order mandated. But if Parent B, fails to make the correct payment amount each and every month, the “past due support” becomes “overdue support.”  And that is not just the particular missed payment but all past due support (arrearages).  Under Bill 1975, if Parent B paid only $2,100 per month in September, 2016, all past due support would become overdue and subject to interest at the legal rate of 6%.*

*The proposed bill applies interest at 6% or Wall St Journal Prime +1%, whichever is greater.

The statute does not specify the date the interest would be calculated from. Should it be from the date the case was initiated; the date the order became final or the date of the default. There are meritorious arguments for all three dates.

But there is also reason not to apply these interest rates or to apply them at a rate that is today 25% above prime rate. One cannot reasonably defend an interest free loan of what the law defines as essential support for dependent minor children.  On the other hand, many if not most support obligors incur unusual expenses at separation (e.g., moving, rental or home purchase deposits and related soft costs) and the economies of one family under one roof are erased.  Another concern is the new trend toward spasmodic employment.  In the past decade employers have increasingly relied on computer models to instantly add and/or terminate employees.  Payor parents who find themselves terminated often forget to put on their “to do” list a visit to modify support based on unemployment.  So the employee who neglects to make $2,200 a month payment in the month immediately following his/her termination risks falling into the “overdue support” bin that would trigger interest rates at a time when the payor is least able to make the full payment.  Presumably, this might be rectified in subsequent modification proceedings but that requires recalculation of not only the support but any interest which began to accrue.

In a conference call of the state bar association’s family law section, the discussion focused upon the complex interest algorithms that would need to be written to trigger and calculate interest and to revise those numbers if, as, and when a modification is granted. In our example Parent B pays his $2,200 in July, August and September but is fired on September 30 and pays only $1,000 in October.  Now his past due support is overdue support and the computer calculates and adds interest to his arrearage.  In November, he applies for a reduction and in January, his support is modified to $750 a month because his income is vastly reduced.  Are we still charging interest on $7,400 arrearage balance at 6% despite his reduced condition?

Lest we be accused of shilling for the payor, the plain fact is that there are times when lengthy payouts of past due support should be subject to some form of interest. Often Courts routinely apply their unwritten 10% on arrears rule despite the fact that the parties have large deposits that could easily satisfy the arrearage.  At its worst, in one case, the arrearage on a $45,000 a month order was well in excess of $1,500,000.  Despite the fact that the payor had reported income 5x the arrearage, the Court ordered a token payment of $5,000 a month in reduction of the past due amount.  The effect was a 26 year interest free loan.  The Superior Court deemed this alleged error to be harmless.  See Karp v. Karp, 686 A.2d 1325 (Pa. Super. 1996)

Is there a middle ground? Encourage courts to award modest interest to incentive Payors to liquidate their obligation.  Apply it to all final orders but allow it to be suspended where justice would make such accruals inappropriate in the court’s discretion.  This might create the proper tension between interest free payment of past due support and debilitating interest assessments against those not really in a position to pay interest.  Research provided to us by Summer Clerks Eunice Kim and Kelsey O’Neil informs us that 28 states apply interest on past due support and 40 states charge it on overdue support as H>B. 1975 suggests.  When states such as Alabama, Mississippi, and Arkansas are charging 7.5-10% interest, one has to ask whether this is another example of “Carville was right” except that we might be a little less modern.

For a list of which states charge interest and how search http://www.ncsl.org/research/human-services/interest-on-child-support-arrears.aspx

 

 

See The Relocation Undone

Posted in Custody, Practice Issues

An interesting and, yes, published relocation case was decided by the Superior Court on June 15. D.K.D. v. A.L.C. 2016 Pa. Super 123 involved custody of a child, age 8, who suffers from Pervasive Personality Disorder. The parents separated shortly after the birth of L.D.  They were not divorced until 2015.

L.D. showed signs of language and speech delays at 18 months and the formal diagnosis of an autism spectrum disorder was made at age 3. After separation the parents lived in close proximity to each other but father’s custody was limited to four hours during the week and alternate Saturdays for an additional three hours.  Whether rightly or not, mother appears to have insisted that visits be confined to her home because L.D. did not respond well to changes in location.

In February, 2014, father filed for larger blocks of custody and a holiday and vacation schedule. Mother responded with a request to relocate with L.D. to Florida where her mother resided. In March, 2015 with the trial of the conflicting claims concluded the relocation request was denied, the court noting that it saw the only change to be a possible improvement in mother’s life by living with her mother.  The Allegheny County court’s order also expanded father’s custody over time and instructed mother that L.D. could and should be taken from mother’s home during father’s visits.

The Order of March 23, 2015 prompted mother to file for reconsideration and special relief. One of the ostensible issues was the failure of the order to address custody for mother if she relocated to Florida without L.D.  Mother also sought a new order premised upon her securing a job in Florida with the US Dept. of Veterans Affairs.  Further upping the ante, mother expressed her intention to purchase a home in Florida for mother and L.D. to reside in.  The trial court took the bait, granting reconsideration and re-opening the record to take additional evidence in June, 2015.

The second hearing was the charm and an August 2015 order granted the relocation. This time the trial court found that not only would mother’s life be enhanced but L.D.’s as well.  The factors which previously weighed against relocation: stability for a child with learning/emotional problems, father’s inability to preserve a relationship following a 1,000 mile move and mother’s unjustified need to control father’s visits faded into the mists.  The remaining factors were adjudged neutral, which is to say favoring neither party.  Curiously, the trial court found that mother did a better job of providing for L.D.’s needs but also expressed confidence that father could step up to do more if mother would only permit that.  But the court found that, despite its prior findings, mother would probably be more cooperative if permitted to relocate away from father.

Father appealed and came out swinging with the canard that the trial court had resorted to the long reviled “tender years doctrine”, holding that young children belong with their mothers. The Superior Court axed that argument finding that the record showed no such prejudice.

But, the appellate court was troubled by the sudden shift in mother’s “circumstances” after losing the initial round of the case. Suddenly a $36-41,000 job appeared in Florida and equally suddenly maternal grandmother committed to acquire a $435,000 home for her daughter and L.D. to reside in.  From the opinion, these appear to be the only new facts underlying reconsideration.  Terming the new order of August 2015 a juridical volte face, the Superior Court found that the record did not support the new conclusions of life enhancement for the child.

In denying relocation during Trial 1, the Allegheny County court found that relocation would disrupt stability of school, neighborhood and friends for a child afflicted with a condition that made any adjustments extraordinarily difficult. The trial court also used mother’s professed willingness to leave the child with father in Pennsylvania if relocation were not granted as a tool to rule against father in Trial 2.  Thus, if mother moved and left the child behind, the child would inevitably have to move to father’s neighborhood and enroll in father’s school district.  Father’s offer to move into the child’s existing district if mother relocated without L.D., was not given any weight.  The trial court also found to have ignored the detriment of losing the existing health and behavioral supports in Pennsylvania that L.D. relied upon in addition to his parents.  In addition the Superior Court noted the inconsistency in finding that L.D. needed to preserve his relationship with his father in denying relocation during Trial 1 but finding that alternate weekend visits in Florida by father was an adequate substitute during Trial 2. In a telling observation, Superior Court Judge Bowes writes that aggregating blocks of visits around school breaks and summer is not a viable substitute for the regular twice weekly contact and alternate Saturday visits that L.D. had been accustomed to have with his father.

Mother’s conduct in relocating to Florida without L.D. while the litigation was still underway and sending L.D.’s grandmother back to Pennsylvania to assume primary custody also did not win her any favor. The appellate court saw this choice of not permitting father to have more time while mother was working at her new job in Florida as emblematic of mother’s insistence upon control.  Other inconsistencies also emerged.  Mother moved the Florida professing that she could find no work in Pennsylvania despite her law license.  She also professed that she could not afford to live in her current $290,000 home.  But with the help of her own mother she was able to secure a $435,000 home in Florida with only a $40,000 job and roughly $30,000 in support and alimony from father.  The Superior Court’s review of mother’s job search in the two years prior to her relocation revealed that it was almost exclusively in pursuit of employment in the Sunshine state.  The home acquired with grandmother’s support is two hours away from grandmother’s own home so that the wholesome image of a tri-generational family in one place proved to be illusory.

Finding that mother’s actions “expose her insincerity” the Superior Court reversed the order granting relocation and directed the trial court to hold a hearing to determine how L.D. could be transitioned to live with his father. If mother abandons Florida to resume residence in Pennsylvania the panel suggested she file a petition to modify the now “corrected” custody order.

This case is disturbing in many aspects. Experienced practitioners are used to seeing parents play that “You want more time, I’ll move away” card.  It would appear that even after a year to prepare a relocation case Trial 1 was an abysmal failure for mother; with little evidence of any real benefit to relocation.  But having burned both time and money failing with Trial 1, mother was instantly permitted to “double down” and change the entire theory of her case with new facts.  Reconsideration of a court ruling is supposed to be limited to correcting the evidence or understandings that were of record.  It should never be an invitation to “re-try” a different case employing different facts or theories.  In a world where custody cases are always fluid with ever changing facts, courts need to insist that absent truly compelling circumstances, litigants get one trial at a time.  A child who, by all accounts, fears change and needs stability has endured 2 years of litigation and will now experience two relocations and a change of primary custody because mother decided not to line up a credible case until after she had lost the first trial.  Both the bench and the bar need to realize that the quest for complete records and best interests can often produce enormous backlogs, huge legal bills and instability for the very children we are all tasked to protect.  The Superior Court appears to have done the right thing in reversing this chain of errors.

The Defined Benefit Pension Crisis Is Here And Very Real

Posted in Divorce, Practice Issues

This is not a major news story for most Americans, but if you participate in a defined benefit retirement plan, one where you are due to receive regular payments of a fixed amount monthly when you reach retirement; pay heed: Bad things are happening.

The current news relates to the International Brotherhood of Teamsters and their Central States Pension Fund. Ironically, irregularities in the fund’s investment strategies are part of what caused Congress to codify pension reform in the 1970s with the Employee Retirement Income Security Act (ERISA).

The Teamsters started to collect and invest pension funds in the 1950s. In the 1970s it came out that many of these investments had lots to do with the needs of union management and little to do with those of pension beneficiaries.  One of the reforms brought about by ERISA was a requirement that pensions be separately managed from the unions or businesses which collected and invested the money.

The ideal pension plan collects contributions and has them independently and intelligently managed so that funds are there to meet all of the obligations the employer or union has promised. It all should make sense except that some assumptions once considered reliable just aren’t reliable any more.  In the 1960 and 1970s when many contributions were made, the assumption was that most retirees would not collect beyond age 70 or 75 at the latest.  That’s when people died back then.  Of course today, the number of retirees living and collecting into their 80s and 90s grows every day.  Problem 1 is that the plans were modeled on the wrong life expectancy assumptions.  Problem 2 is the stock market and its brother the real estate market.  Historically, pension contributions have been invested in securities and/or real estate because these investments could be relied upon to increase 7-8% per annum over the long term.  At these assumed rates, money doubles in value every 8 to 9 years.  Yes, we all know that some years are up and some are down but in the long term the 7-8% returns were thought reasonable.

Using the Standard & Poor 500 stock index as a benchmark stocks reliably increased from 1985 to 2000 when we had the Enron crash. They did not recover their 2000 values until 2008 and as soon as they did, that crash caused another huge decline.  Again it took us six years to get back to 2008 values or, as some would say, back to 2000 values.  Stocks snapped back and rose quickly until August, 2015 but since that date, values have been bouncing, bouncing, bouncing.  From February 2014 to February, 2016 the index made no real headway.

Pension plans need to liquidate investments like real estate and securities to pay benefits. They don’t get to tell the retiree, “Hey we will pay later this year when stocks recover.”  The money is due every month no matter what condition the market.

Today, the Central States Teamsters Pension Fund pays out almost $3.50 for every dollar it takes in. In theory, that should not make a difference because today’s dollar in should not be paid out for many years.  But, some of the dollars paid in overtime not only haven’t earned their 7-8% returns.  In fact some “lost” value, particularly those invested in hedge funds during the past 10 years.  What that means is that huge swaths of defined benefit plans are grossly underfunded.  The crisis the Central States Plan faces is that it has no place to go to secure enough to pay the benefits it promised.   So, there is now a very acrimonious debate underway involving Congress, crisis manager Ken Feinberg and the Teamsters over who will pay.  The Teamsters say the taxpayer should make up the shortfall.  Needless to say, Congress is not viewing those prospects with any contentment and Feinberg is saying top end benefits in particular need to be cut or the whole ship goes down.

State pensions are another animal. A state obligation to pay a retirement benefit comes with the guarantee that if the state lacks the money, the taxpayer will be assessed.  Pennsylvania has some of the worst funded pension plans in the United States.  The effect is that state contributions to pension payments have quadrupled in the past six years.  Underfunded obligations to public employees were 1.5% of state expenditures in 2010.  By 2019 it will be 10% by 2019.  If you think that’s a problem take a look at Philadelphia’s situation.  Today 20% of the city’s budget is devoted to paying retirees.  At the state level, the pension fund actually declined in value in 2015.  When bond agencies see these kinds of problems, ratings are downgraded and interest rates soar.

So, why is this part of a divorce law blog? Because, if you or your spouse are due money in the future on a monthly basis, there is a very real possibility that you won’t see all of it.  Yes, we just wrote that by law states cannot cut pension benefits because these are contracts for deferred compensation on services the state already got from its employee.  But much as with the situation in Puerto Rico and Atlantic City where governments are verging on default of their bond payments and other general obligations every day, these problems do not present easy solutions.  Taxpayers earning $4,000 a month are not going to quietly accept large tax increases to pay unfunded retirement obligations that often are double that amount.

If you are an attorney dividing a defined benefit pension, get your client to investigate how well funded that obligation is. And if there is a reason for concern, the retirement model for settlement or trial should consider sharing that risk.  This is not an easy evaluation in any circumstance.  Let’s say that wife is a teacher with a defined benefit plan that has a $300,000 cash value, but she is five years away from retirement and the plan is only 70% funded.  Does that not arguably make it a $210,000 plan? Conversely, suppose she is married to a spouse with a $300,000 IRA who is also five years to retirement. In theory, during the next five years she can still be accruing benefits, albeit underfunded benefits, while spouse’s IRA undergoes a 10% market correction that reduces his $300,000 to $270,000.  He may also be self-funding IRA contributions but they could decline as soon as they are funded if he invests in oil and gas or department stores or office supply chains.  There is no happy solution here but there is reason to model a retirement distribution where the risk is shared.  In other words, perhaps both the IRA and the defined benefit plan should be divided even though they are today, technically of equal value.

 

The Guidelines are Coming!

Posted in Practice Issues, Support

For those of you who practice in this area or are “regulars” in the child support system, you know that every four years, the statewide child support guidelines are due for an update. The purpose is to try to keep pace with the economic times and the cost of raising children.  For the 2008 and 2012 revisions, the Domestic Relations Procedural Rules Committee retained Dr. Jane Venohr of the Center for Policy Research in Denver, CO. to compile economic data.  Dr. Venohr is again involved in the 2016 process.

The Rules Committee published its proposed guidelines on April 21. For now, they are subject to comment from any interested individual and should be directed through Bruce Ferguson, Esquire (domesticrules@pacourts.us) as counsel to the Committee.  Once the comment period closes, a final version will be sent to the Pennsylvania Supreme Court for its review and decision.  Because the guidelines typically do not present policy issues, the Court has usually adopted the proposal without amendment.

The current draft guidelines make no substantive changes to the procedures by which a support order is established or modified. At the same time there is another proposed substantive modification to Pa. R.C.P. 1910-16-4(d) which may be adopted by the Supreme Court known as Recommendation 146.

Generally, the news is that costs have increased and so have the guidelines. The self-support reserve has increased 5.1% to $981.  Support for children has also increased.  Using two children for illustrative purposes, the amount of support to be allocated between the parents looks like this:

Combined income                              2012                      Proposed

5000                                                    1369                      1415

10000                                                  1981                      2044

15000                                                  2532                      2586

20000                                                  2997                      3052

25000                                                  3425                      3492

30000                                                  3836                      3902

Above 30,000                                      11.6%                    11.8%

Generally the increase ranges from 3.3% at the lower end to 1.6% at the top. The data analyzed to arrive at these values comes from September, 2015 data.  During this period the CPI for all Urban Consumers in the Northeast rose from 243.323 to 252.922.  One could suggest from this that the guidelines are not keeping pace.  But then the guidelines do not include the costs of health insurance and related expenses, which are allocated by net income “on top” of the guideline amount.  Needless to say, a major driver of consumer prices is the cost of health insurance and related care.  The same can be said for day care costs, which also travel outside the guideline amount.

Disclosure Lives In The World Of Prenuptials: Or Does It?

Posted in Practice Issues, Prenuptial Agreements

To some readers, the title of this blog may seem yesterday’s news. Drilled into our collective heads since Simeone v. Simeone (581 A.2d 162) was decided in 1990 is the mantra that “For any prenuptial to be valid there must be a fair disclosure.”  The 2005 amendments to the Divorce Code brought some ambiguity to the matter.  The statute passed that became effective in January of that year contained a section related to prenuptial agreements (Sec. 3106).  It said that a party could “voluntarily and expressly waive, in writing, any right to disclosure…beyond the disclosure provided.”  Then it added another clause essentially allowing the party defending an agreement to assert that the contesting party did have “adequate knowledge of the property or financial obligations” of the spouse defending the agreement.

One of the challenges when legislation is written by committee is finding clarity in the language. Section 3106 is a kind of classic example. First, it is written in the negative.  Then there is the dangling language about “beyond the disclosure provided” and “adequate knowledge.”  Suppose the disclosure is incomplete or inaccurate?  Can that still be waived?  And when does knowledge of your future spouse’s financial affairs rise to the level of adequate?

In recent years we have been approached to draft prenuptial agreements by clients who were not really interested in making a disclosure. Typically, these are folks who sincerely believe that if their future spouse knew just how wealthy they were, it might unleash spending problems or produce other sources of friction.  In each instance, we have resisted temptation because the statute talks about waiver but ends the sentence with reference to a “disclosure provided”.  This can produce some testy interactions with clients who want to focus only on the waiver element of Section 3106(a)(2)(ii).

A recent Chester County ruling in Mandler v. Mandler, 64 Chester Co. L.R. 159 (2016) underscores our concern through its interpretation of the statute.  In April, 2005, groom presented bride with a prenuptial agreement that he had secured from a website called Lawdepot.com.  Bride took the agreement to a local attorney who suggested changes, one of which related to either the absence or paucity of the disclosure.  Roughly three weeks later the agreement was signed with some changes.  Its disclosure provision said that the parties waived any rights to further disclosure because they were satisfied with what had been disclosed.

A month after the prenup was presented and about 10 days after it was signed, the not so blessed union was formed. We should add that bride, now wife was employed by some of groom/husband’s businesses both before and after the wedding date.

To describe husband’s financial picture as Byzantine would be an understatement. Residential and investment real estate were coupled with medical management and consulting companies. Meanwhile, husband claimed to be unemployed during the two years prior to marriage.  Financial records did not square with filed tax returns and expenses were funded with a labyrinth of “inter company” loans more related to cash management than business lending.  Sitting atop this empire were unpaid federal and state tax debt of roughly $6,000,000.

Wife sued for divorce in 2013 and moved to set aside the agreement in June, 2014. Hearings consumed five days over the course of ten months.  As one might expect given the facts described thus far, husband appears to have had great difficulty explaining his own financial situation even after asserting that his spouse had adequate knowledge of the same facts to permit her waiver to be deemed valid.

The opinion of the Honorable David Bortner marches through the statute noting early on that there is no judicial or statutory precedent for “adequate knowledge” sufficient to overcome a disclosure that otherwise fails in completeness or accuracy. He then makes the point that as he reads the statute full disclosure must be waived prior to rather than contemporaneous with execution of the agreement.   His reading cannot be faulted although it opens a second door for statutory interpretation: viz., Is the waiver a separate transaction that must be documented and how much time must elapse before the execution for it to be valid.

But the primary focus of the opinion is on the words in Section 3106(a)(2)(ii); “beyond the disclosure provided.” The Court notes that if disclosure could be entirely dispensed with the statute should have read “beyond the disclosure provided, if any”.  The conclusion is that absent “a disclosure” a waiver cannot be upheld.

There being no actual disclosure attached to the Mandler agreement, the trial appears to have been consumed with proving bride’s actual and adequate knowledge of husband’s financial situation at the time of execution. This is more often than not a “fool’s errand.”  As the opinion notes, it is the burden of the person attacking the agreement to show by clear and convincing evidence that she did not have adequate knowledge. See Section 3106 (a)(2)(iii).  To accomplish that in a meaningful way would require her to undertake discovery of financial data created a decade earlier to gain the knowledge she is asserting she did not have then and to conclude her testimony by stating that she knew none of it then or what she knew was not adequate.  In this case, it wasn’t difficult to meet her burden because it appears that husband could not, himself, convincingly describe what he owned “then.”  Effectively, his argument was:  “Judge I’m not clear what I owned when she waived disclosure of my assets, but my Wife sure did.”

One of the more interesting aspects of the opinion is its analysis of Lugg v. Lugg, a 2013 Superior Court reported decision. (64 A.3d 1109)  Mr. and Mrs. Lugg were negotiating a divorce agreement and Mrs. Lugg tended to wander away from her attorney’s counsel and negotiate on her own.  Husband’s father and brothers were lawyers so they happily did the drafting.  One day, Mr. Lugg and a secretary from dad’s firm arrived at Wife’s home with an agreement.  This does not appear to have been a surprise but after 90 minutes, voila, an agreement was executed.  The parties then started to process of signing car titles and deeds consistent with the document.  Mrs. Lugg later contested the agreement noting that no disclosure had been provided.  Meanwhile the agreement stated that disclosure was waived.  The trial court in Clinton County and the Superior Court affirmed the agreement.  The Superior Court opinion states “ If there is no allegation that {a party} misrepresented his financial resources and ….{the other party} was aware that {no disclosure was made}, the Court cannot find …fraud or misrepresentation.  The Superior Court states that it was deciding this under Section 3106.

The question of whether prenuptial and post nuptial agreement cases should be decided differently may still be an open one although all of the case law says they should be treated the same. But in this instance the Superior Court held that financial disclosure may be waived in its entirety because that is what the legislature intended under Section 3106.  Bear in mind, the legislature adopted Section 3106 and applied it to prenuptial agreements alone even though case law had long held prenuptial and post nuptial agreements to the same standard  See Holz v. Holz, 850 A.2d 751, 757 (Pa. Super. 2004).  So we have an interesting question.  The Superior Court says waiver may mean waiver of any disclosure.  Judge Bortner’s holding appears to be stating that where a statute says “beyond the disclosure provided” those words must be given their plain meaning which is to say that a disclosure must be provided.

 

Divorce Code Amendments: But Not What We Expected

Posted in Divorce, Practice Issues

For some time now, the General Assembly has been working towards amendment of the Divorce Code to reduce the waiting period for an unconsented no-fault divorce from two years to one. That legislation (House Bill 380) has passed committee and is awaiting final action.

Meanwhile another amendment to the Divorce Code quietly slipped through the legislature and was signed into law by the Governor on April 21, effective June 21, 2016. It is an odd piece of legislation; a kind of fault based no fault divorce ground.

Under House Bill 12 of 2015 (printer’s No. 2404) if one spouse has been convicted of a misdemeanor or felony involving

Criminal homicide

Assault

Kidnapping

Human Trafficking

Sexual Offense

Arson

Robbery

Victim/Witness Intimidation

Homicide by Vehicle

Accident Causing Death or Personal Injury

AND the Plaintiff sues for a mutual consent no-fault divorce, the consent of the convict is “presumed” if the Plaintiff is the victim of any of these crimes.

This is the first time this writer has seen the bill and I begin by confessing that I have not studied this subject very carefully. But if I am the victim of homicide or an accident causing death, one of the formalities I can dispense with is a posthumous divorce from my perp spouse.

I do offer that perhaps the intention is to include attempts at homicide or personal injury but the statute is not very clear on this subject.

I also note that for more than a century Pennsylvania has conferred divorces for “treatment” endangering the life or health of an innocent and injured spouse (Section 3301(a)(4) and conduct amounting to “indignities” to an innocent and injured spouse such as rendered the life of the victim intolerable and burdensome.(Sec. 3301(a)(6). Conviction of any of the above specified crimes in a case where the victim was a spouse would have res judicata effect in the subsequent divorce proceeding.  The only plausible defense would be that the victim was not innocent and injured.

The new statute requires a conviction to create a presumption. The statute does not make the presumption irrebuttable so, one must assume that a defendant spouse can still force the victim to trial so that the offender may rebut his presumed consent.  Even more vexing would be the task left to the trier of fact.  Husband attempts to kill or rape wife.  He is convicted but somehow draws a sentence of less than two years (another divorce ground under Sec. 3301 (a)(5).  Wife sues for divorce and tenders her own consent and the “presumed” consent of her spouse.  The offender spouse appears and testifies under oath that he does not consent.  What now?  Can the Court hold that he consented when he didn’t?  Wasn’t it just easier the old way, where the injured spouse tendered a certified copy of the conviction and rested her case?  Yes, the offender spouse could argue and present a case that his wife/victim was neither innocent nor injured, i.e., she deserved her beating or rape or robbing or burning.  But, I think that I like my chances of getting my client divorced better this way than relying upon a presumed consent that may be rebutted.  I know how to cross examine a person who claims the spouse got what she deserved. I’m not so sure how to cross a guy who says simply “I don’t care about the statute, I do not consent.”

So we have a change in the law, but I am not certain it can be termed an “advance”. One small consolation is an amendment to Section 3302.  This is the counseling provision and it now states no counseling can be ordered where one party has a Protection from Abuse Order or where one of the specified crimes listed above has resulted in a conviction.  Of course, one can still insist on the counseling while the criminal charges are pending unless a PFA found its way onto the docket.

No Lawyers Allowed – Discovery Rule Decision Bars Counsel from Observing Evaluation

Posted in Evidence, Practice Issues

123rd.com ostillThe Discovery Rules account for all manner of need for obtaining evidence. Many of these rules are seldom, if ever, utilized by family law attorneys because either they are not germane to a family law case; not permitted by the Divorce Code (i.e. prohibition against discovery in simple support cases), or; family court cases have their own procedure for obtaining the information. One example would be Discovery Rule 4010 which provides for the examination of a party where their mental or physical condition  has been called into question. As demonstrated by the case below, you will commonly see this Rule used in a personal injury case. This rule would not necessarily come into play in the Family Court since the Custody Code and associated Rules of Civil Procedure, for instance, outline how and when a custody or psychological evaluation will occur.

Still, though this rule may not crop up often, if at all, in a family law case, it is still a rule and understanding it may help an attorney whose client is undergoing some form of physical or mental evaluation to be familiar with the Court’s holding in Shearer v. Hafer, 2016 WL 910146.  At issue was whether the trial court erred in granting Hafer’s request for protective order which prevented Shearer from having counsel present during Hafer’s neuropsychological evaluation pursuant to Discovery Rule 4010.

The background to the case is that Hafer was sued by Shearer for injuries sustained in an automobile accident. Shearer underwent a neuropsychological evaluation and the defendant in the case, Hafer, sought to have an independent evaluation conducted setting up a case of dueling experts. Shearer, as the plaintiff and party seeking damages, did not generally oppose the request, but insisted on having their counsel present for the test.  This demand was objected to by the independent physician hired by Hafer on, among other reasons, professional ethics grounds. Hafer filed for a protective order to keep Shearer’s attorney out of the evaluation. Their justification for the exclusion was that Shearer’s attorney, through observation, could create areas of cross-examination of the expert’s eventual report, particularly when viewed against the doctor’s written statements. The concern, it would seem, is that in watching how the sausage is made that counsel attacking pieces of the process on cross-examination could unfairly invalidate a conclusion by focusing on one of numerous elements which in isolation may not lend themselves to that outcome. Having an adverse audience, it was argued, could lead to invalid or biased results.

So while the party being examined under the rule can have counsel present – for, among other reasons, to avoid any self-incrimination – the rule is silent as to the access of the opposing counsel.  The Superior Court’s decision established the prohibition against the presence of outside observers during a neuropsychological evaluation and found good cause for the protective order.  The Trial Court made a careful consideration of the issues and opinions and ethical issues of the governing bodies for neuropsychology professional associations and potential for an invalid or biased outcome.  The Trial Court also expressed a concern that the doctor’s written statements could be used for impeachment purposes if the examination were conducted in the presence of a third party.

Those concerns led to the conclusion that having the “requesting” party’s attorney in the room carries more risk to the process than reward and for that, counsel is excluded and left wait until the report is issued and wait to cross-examine the physician at trial.

(Photo Credit: 123rf.com / ostill)

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Aaron Weems is an attorney and editor of the Pennsylvania Family Law Blog. Aaron is a partner in Fox Rothschild’s Blue Bell, Pennsylvania office and practices throughout the greater Philadelphia region. Aaron can be reached at 610-397-7989; aweems@foxrothschild.com, and on Twitter@AaronWeemsAtty.