Archives: mutual

Darcy Williams of our Chester County office recently provided an entry to our firm’s Berks County legal blog by discussing how the Court of Common Pleas dealt with a support modification which was filed less than twenty days after an agreed order went into effect.  Citing the Pennsylvania Support Code with respect to filing modifications based on changes in circumstance, the Court dismissed the petitioning mother’s claim that a mutual mistake occurred when the parties reached an agreement on the amount of support to be paid in this case.  The Court noted that the Mother’s remedy was to file an appeal within twenty-days of the Order, not file to modify since no change in circumstance had occurred.

It is an interesting example of procedural nuance and code interpretation and offered in its entirety below:

 

On December 11, 2012, the Honorable Peter W. Schmehl of the Berks County Court of Common Pleas, Domestic Relations Section, explained what factual and legal requirements must be met for a petition for modification of a support order in Miller v. Miller, No. 12-15465 (Pa. Ct. Com. Pl. Berks Co., Dec. 11, 2012).  In this case, Ms. Miller filed a Complaint for Support against her ex-husband, Mr. Miller, for both her and her child.  After a domestic relations conference before a Domestic Relations Conference Officer, the parties consented to a Support Order allocating approximately $1,900 per month to Ms. Miller and her child.

On August 31, 2012, a mere eighteen days after consenting to the Support Order, Ms. Miller filed a Petition for Modification of a Support Order (the “Petition”). In the Petition, Ms. Miller claimed that “Since the entry of the Order, the circumstances have changed substantially as follows:  Expense of $3,800 per month was improperly deducted from Mr. Miller’s net income.” On September 13, 2012, Mr. Miller filed Preliminary Objections to the Petition claiming that Ms. Miller failed to comply with Pa. R.C.P. 1910.19(a), which requires that the Petition aver a material and substantial change in circumstances in the two weeks since the Support Order was entered.  Basically, Ms. Miller did not allege any financial changes over the eighteen-day period, but instead, Ms. Miller simply believed that there was a calculation error in the Support Order.  On September 20, 2012, the Court sustained Mr. Miller’s Preliminary Objections and dismissed the Petition.

On October 1, 2012, with the assistance of her new counsel, Ms. Miller filed a Petition for Reconsideration and an Answer to the Preliminary Objections.  Ms. Miller argued that Judge Schmehl should reconsider because she was not given the requisite twenty (20) days to either Answer Mr. Miller’s Preliminary Objections or to file an amended Petition.  In her Answer to the Preliminary Objections, Ms. Miller also argued that the agreed upon Support Order was based on a mutual mistake of the parties, and that the biweekly expense of $1,900 was improperly deducted from Mr. Miller’s support calculations. 

Judge Schmehl found that, although the decision granting the Preliminary Objections cut short Ms. Miller’s twenty-day period to answer or amend the Petition, any Answer or amendment would be futile given these particular Preliminary Objections and Ms. Miller’s underlying Petition.  Ms. Miller could not possibly answer the Preliminary Objections such that the Court would overrule the Preliminary Objections. 

In affirming the prior Order sustaining the Preliminary Objections, Judge Schmehl first noted that 23 Pa. C.S.A.§ 4352(a) provides that a petition to modify a support order may be filed at any time if the requesting party demonstrates a substantial change in circumstances.  Further, Pa. R.C.P. 1910.19(a) requires that a petition to modify a support order shall specifically aver the material and substantial change(s) in circumstances upon which the petition is based. 

Judge Schmehl found that Ms. Miller did not aver any changes in circumstance in her Petition, let alone a material or substantial changes.  Judge Schmehl noted that Ms. Miller did not allege such valid changes in circumstances such as loss of employment or receipt of a promotion in the Petition.  Clearly, a mere allegation that a support calculation is “improper” is insufficient to support a finding that circumstances had materially changed. 

Relying on Florian v. Florian, 689 A.2d 968, 971-72 (Pa. Super. Ct. 1997), Judge Schmehl held that had Ms. Miller wished to challenge the calculation set forth in the Support Order, she should have filed an appeal, not the Petition. 

Judge Schmehl held that the Support Order was not only an arrangement between the parties, but was also the result of the determination of an officer of the Court – the Domestic Relations Conference Officer – acting as a trier of fact.  The Conference Officer’s finding was consented to by both parents and no appeal followed.  Judge Schmehl found, therefore, that the Support Order is now the law of the case, and would be subject to change only upon some material and substantial change in circumstances. 

First, Judge Schmehl’s order affirms that a support litigant must follow the proper procedures for challenging an incorrect calculation by filing an appeal.  Second, Judge Schmehl cut short a potentially futile, costly and time-consuming battle involving the Petition when it was clear that Ms. Miller’s arguments were without merit from the outset. 

Following up on Mark Ashton’s “celebrity” themed blog entry on the Los Angeles Dodgers’ ownership, another high profile individual is having a residual effect on divorces: Bernie Madoff.

Mr. Madoff’s crimes are well-documented and high profile. His arrest has given rise to a media niche on scan artists, including Montgomery County’s own “Madoff”, Robert L. Krikorian, who was recently convicted of a Ponzi scheme and sentenced to three to seven years in jail for bilking investors out of (a paltry) $870,500.00 over about four years. If you rip off your investors you are labeled a “Madoff.”

But in being duped, should people get the chance to redo the a Marital Settlement Agreement negotiated and executed years before the fraud was discovered? That is the question being asked in New York where a well-heeled couple split their assets in 2006, including a large investment account with Madoff. Wife pulled her money from the investment, while Husband kept his in. You probably can guess what happens next: Husband’s money gets lost in the Madoff scandal while Wife continues to live well in her Upper East Side apartment.

 

The question before the New York bar is whether Husband can sue to have the Marital Settlement Agreement reopened and the funds Wife retained redistributed to account for his Madoff loses. Sides are being taken in this dispute and many practitioners view a favorable outcome to Husband as having wide reaching implications to contract law and beyond; it calls into question whether a deal is ever really “done.”

 

The crux of Husband’s case rests on the argument that the parties’ Agreement (contract) is nullified by “mutual mistake;” they were both mistaken by the existence of an account with Madoff. It appears that Husband is arguing in that they were both mistaken their belief that they had an account containing millions of dollars with Madoff. – the Madoff fraud proves they, in fact, had no “account” with Madoff. So, even if they had moved $1 million dollars over to Madoff, they really weren’t investing it. Madoff stole just stole it…except for the $6.6 million cash payment Husband swung over to Wife from the account.

 

This case basically sets up the possibility that events subsequent to an agreement could allow for a total reexamination of the deal. Interestingly, we had (have) a national crisis over real estate values (many would argue millions of frauds were committed), yet I am not aware of any parties successfully trying to re-litigate a deal in which they kept the marital residence and off-set its equity value with cash assets. No one is successfully re-litigating their stock holdings that tanked. In my experience, a client and her husband split their stock account when they separated; my client moved her money into cash, while Husband – allegedly a financial guru – keep his in stocks. Two years later, my client has retained most of her money in cash, while husband has lost all of his money to his lifestyle and stock market.  Husband unsuccessfully argued that Wife should bear some of the liability because the assets were marital in nature, but the court held that he was responsible for his portion of the money.

 

In New York, Husband’s case looks, in many respects, as a brazen attempt to capitalize on a highly publicized crime for which neither party had any knowledge or control over. The only control they had was how they decided to invest their individual pieces of the marital estate after the divorce. Wife chose to pull her money out; Husband opted to keep his in. Wife mitigated her risk; Husband appeared to have raised the stakes.

 

After a trial court dismissal, the New York appellate court reached a 3-to-2 decision in favor of Husband’s right to sue to revise the deal based on “mutual mistake.” Whether he will successfully revise the deal remains to be seen.