Although our law firm has litigated several of the largest support cases decided in Pennsylvania the matter of how much support children need is one of endless controversy for those who have household net incomes exceeding $20,000 per month. We are often asked to offer second opinions or discuss those cases we have tried. The fact is that while we have opinions about these larger cases, most of them settle because the range of possible outcomes is so wide even in cases where we believe we understand the approach taken by the judicial officials deciding the law.
Since 1984, Pennsylvania has operated under a Supreme Court ruling in Melzer v. Witsberger, 480 A.2d 991 (Pa. Supreme 1984). The case created a multi-part formula beginning with an analysis of the income each parent’s available income and then assessing the “reasonable needs” of each parents for his or her own support and graduating to an assessment of the reasonable needs of the child or children in each parent’s household. Based upon a subjective evaluation of these needs, the court allocates what contributions need to be made from one household to the other to cover the child’s reasonable needs. The process is complicated and rife with opportunity for “judgment” calls. Moreover, most members of the judiciary will candidly admit that a lifetime of common sense experience often leaves them unprepared to decide what is reasonable when wealth is enormous. Does a one year old need a governess if the primary caretaker is already staying at home. Does a reasonable vacation expense include first class seats? Private plane? 747? While Pennsylvania has not opined on these subjects, other states have had to.
It is rare for high income cases to be reported because they usually settle. But in January of this year a Schuylkill County case, Rich v. Rich, was decided by the Superior Court based upon their review of a Melzer analysis. 967 A.2d 400 (Pa. Super. 2009)
The case involved support of four children at its beginning. One was emancipated during the two years of litigation culminating in the final order. The father was a CEO for several coal and co-generation companies. Father’s gross income was $9-10 million per annum. His net worth roughly four times that amount. Mother was not employed. Father’s home and contents occupied 150 acres and had an aggregate worth of $2-3 million. Mother lived in a mortgage free $725,000 home.
Mother presented expenses of roughly $180,000 a year for the four children. The trial court accepted these expense and awarded $15,000 a month. Support was not reduced upon the eldest child’s emancipation, the Court finding that other expenses would have risen during the period involved.
Father appealed from the order. His first complaint is that Ms. Rich failed to document her expenses. The Rules of Civil Procedure were amended in 2006 to require documentation of expenses in cases decided under Melzer where net income of the family exceeds $20,000 per month Pa.R,C.P. 1910.27(c)(2)(a). His particular complaint was a $50,000 item budgeted for credit cards charges without supporting data or delineation. The Superior Court found that Father waived the argument when he agreed that the expenses presented for 2005 were reflective of actual post separation expenditures.
The second basis for the appeal was the trial court’s refusal to reduce support by 25% once the eldest child was emancipated. The appellate court properly noted the law to forbid arithmetic reductions not supported by testimony related to expense savings. At the same time, it observed that it was also an abuse of discretion to infer that the cost of living increase was equal to the reductions in costs arising from a child’s emancipation. The case was remanded to the trial court to consider what cost savings would result from the child’s emancipation.
Mother also appealed. T he core of her appeal was that the support was insufficient and she pointed to two cases litigated by Fox Rothschild (on behalf of plaintiff’s) where more support was awarded for children than Mr. Rich was required to pay even though his income was 2-4x greater than the payor spouses in Karp v. Karp, 686 A.2d 1352 (Pa. Super. 1996) and Mascaro v. Mascaro. 803 A.2d 1186 (Pa. Supreme 2002)
The Superior Court easily disposed of this . The support award made by the court was 100% of the budget presented by Ms. Rich even though she claimed that her needs were only 10% of the $15,000 in claimed monthly expenses. Where she pointed to the disparity in accommodations between her $725,000 home and father’s $2-3 million dollar residence, the Court pointed to Colonna v. Colonna, 855 A. 2d 648 (Pa. Supreme, 2004) where the Supreme Court of Pennsylvania held that “case law does not require that all the recreational benefits that the children enjoy when they are with Father must also be provided through support from Father when they are in Mother’s custody. In fact, Mother admitted that the children have continued to attend private schools and summer camps as they did before she established a separate residence. Our review of the record in relation to Mother’s first two issues reveals that the court’s conclusions are not in error and no abuse of discretion was committed.”
So, in the 25th year after Melzer became the law of the Commonwealth, we still do not have an appellate case that thoroughly analyzes what is a “reasonable” expense for a child or even how to allocate things such as auto insurance or propane bills between parent and child. But we do know that $15,000 is not an abuse of discretion for four children and we are reminded that Mr. Rich’s access to vacation homes while the children are with him does not warrant support adequate to allow Ms. Rich to replicate that lifestyle while with the children. The case also discusses how to dispose of huge accumulations of credits or arrearages emerging from lengthy proceedings and interim payments. But that will be for another day.