Recently, a case came before the Superior Court addressing the question as to whether a party has the right to charge interest on unpaid portions of an equitable distribution award. In Raines v. Raines, 2016 PA 227 (Superior Court), the basic facts are that husband and wife divorced and the recommendation of the master requiring husband to refinance a property and pay out wife was entered as an Order of Court. Under the terms of the order, if husband had not paid the cash by a certain date, wife was entitled to 6% interest per year on the unpaid balance.
Suffice to say, husband didn’t pay his obligation. He could not refinance the property and was forced to try to sell it in order to pay out wife. Consequently, wife pursued contempt and to have the debt considered a judgment. She was not successful since the court found that husband was not in willful violation of the Order and was trying to mitigate the problem by selling the house.
Eventually the house sold and at settlement, wife presented husband with a settlement distribution which provided her interest under the order, plus interest under Section 8101 of the Pennsylvania Code which relates to interest attached to monetary judgments. That law exists so that a judgment holder is not prejudiced by any appeals which might delay the ultimate satisfaction of the judgment. Here, wife was trying to attach it to the money owed and increase her recovery from husband, even though the trial court rejected her request to do so.
Husband, under protest, paid the interest so to not delay settlement and filed to have the Section 8101 interest returned.
The trial court found, the Superior Court upheld, that an equitable distribution order is not a “judgment” as contemplated by Section 8101. A judgment is a “final determination” of a case and in the context of divorces, it is the decree which is the “final determination” and the equitable distribution order is an ““ancillary issue.” The court went on to identify that the entry of judgments against equitable distribution property is permitted under 23 Pa.C.S.A. 3502(e)(1) as an enforcement remedy and to accept Wife’s argument in favor of Section 8101 would effectively nullify a portion of Section 3502. The Court, understandably, declined to invalidate Pennsylvania law on this point.
So while Section 8101 is available to family law cases, it is only after someone has successfully had the equitable distribution order entered as a judgment under Section 3502(a)(1). The order, in and of itself, is not a judgment.
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; firstname.lastname@example.org, and on Twitter @AaronWeemsAtty.