J-A14001-16



NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

MICHELE D. HAYES                              IN THE SUPERIOR COURT OF
                                                    PENNSYLVANIA
                         Appellant

                    v.

GARY M. HAYES

                         Appellee                  No. 1705 MDA 2015

              Appeal from the Order Entered September 2, 2015
                In the Court of Common Pleas of York County
                  Domestic Relations at No(s): 857 SA 2001
                                 DRO# 73735
                             PACSES #31310334

MICHELE D. HAYES                              IN THE SUPERIOR COURT OF
                                                    PENNSYLVANIA
                         Appellee

                    v.

GARY M. HAYES

                         Appellant                 No. 1772 MDA 2015


              Appeal from the Order Entered September 2, 2015
                In the Court of Common Pleas of York County
                  Domestic Relations at No(s): 857 SA 2001



BEFORE: BOWES, OTT AND PLATT,* JJ.

MEMORANDUM BY BOWES, J.:                       FILED JANUARY 12, 2017

     Michele D. Hayes (“Mother”) appeals and Gary M. Hayes (“Father”)

cross appeals from the order entered September 2, 2015, modifying Father’s

child support obligation. We reverse and remand.

* Retired Senior Judge assigned to the Superior Court.
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       The facts relevant to our review are as follows.       In February 2015,

Father was paying child support of $3,041.41 per month to Mother for the

care of their adult daughter.1 On February 11, 2015 Mother filed a petition

for amendment of support order seeking an increase in support.          The court

held a conference on April 17, 2015, and entered an order on May 4, 2015.

The court found Mother had neither earnings nor an earning capacity. The

court determined that Father’s net income for 2014, which was generated

largely from his interest in two corporate entities, was $25,854 per month,

resulting in a child support payment of $2,523.14, plus $252 due per month

on arrears.     Mother and Father filed timely petitions for reconsideration

which were both denied.          Thereafter, Mother filed a notice of appeal and

Father filed a cross appeal. The parties complied with Pa.R.A.P. 1925, and

the court filed its Rule 1925(a) opinion. This matter is now ready for our

review.

       We address Mother’s contentions first.        She presents the following

issues for our consideration:

    1. Did the trial court abuse its discretion by including all of Father’s
       2014 tax payments in its calculation of Father’s net income?

    2. Did the trial court abuse its discretion in failing to make the
       effective date of the order retroactive to January 1, 2013, by
       finding that “the evidence is insufficient to determine if
____________________________________________


1
 Mother and Father’s daughter was declared to be an incapacitated person
by order of June 16, 2006.



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       (Father’s) income is dramatically different from the last order
       that was entered on December 9, 2008”?

Mother’s brief at 2.

       We review a child support order for an abuse of discretion. E.R.L. v.

C.K.L., 126 A.3d 1004, 1007 (Pa.Super. 2015).           “[T]his Court may only

reverse the trial court’s determination where the order cannot be sustained

on any valid ground.”         Id. (citation omitted).   Moreover, “An abuse of

discretion is [n]ot merely an error of judgment, but if in reaching a

conclusion the law is overridden or misapplied, or the judgment exercised is

manifestly unreasonable, or the result of partiality, prejudice, bias or ill-will,

as shown by the evidence of record.” Id. We may reverse a trial court’s

child support determination only where the order cannot be sustained on any

valid ground. J.P.D. v. W.E.D., 114 A.3d 887, 889 (Pa.Super. 2015).

       Mother first assails the court’s determination of Father’s net income.

She asserts the court erred in including all of Father’s 2014 tax payments in

its calculation.2    Specifically, she claims that the court should not have

deducted $373,741 in payments Father made toward his 2013 Federal

income taxes on January 15, 2014 in calculating his net income.           Mother

continues that the payment should have been deducted from Father’s 2013


____________________________________________


2
 A party’s monthly gross income is ordinarily based upon, at least, a six-
month average of all of the party’s income. Pa.R.C.P. 1910.16-2(a).



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income. As a result of this error, Mother argues, Father’s available income

for child support in 2014 was greater than the amount decided by the court.

        The court observed that the dispute over its calculation of Father’s

income concerned only the income produced by Father’s ownership in

Diversified Traffic Products, and tax payments made therefrom. The court

credited the testimony of Father’s expert, Gregory Crumling, certified public

accountant, which reflected a cash-flow methodology for evaluating Father’s

net income.      Pursuant to the guidelines established in Pa.R.C.P. 1910.16-

2(c),3 the court subtracted federal taxes of $1,026,481 paid from Diversified

Traffic Products’ gross earnings during 2014.       This deduction included a

$373,741 payment Father made during 2014 towards his 2013 federal

income taxes.       Under a cash-flow analysis, that distribution would not

otherwise be available for Father’s 2014 support obligation regardless of

when those taxes were owed.


____________________________________________


3
  Section 1910.16-2(c) of the Pennsylvania Rules of Civil Procedures reads,
in pertinent part:

       (c) Monthly Net Income.

          (1)      Unless otherwise provided in these rules, the court
             shall deduct only the following items from monthly gross
             income to arrive at net income:

               (A) federal, state, and local income taxes;




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     Mother avers the court’s cash-flow analysis contravenes binding

Superior Court precedent.   In Spahr v. Spahr, 869 A.2d 548 (Pa.Super.

2005), we considered whether a 2003 corporate distribution made to the

husband therein solely for the purpose of paying his 2002 federal tax was

properly counted towards his 2003 income.     The husband argued that the

distribution was made in accordance with tax law and his established

business practice, and rejected the suggestion that the tax payments were

made to lower his 2003 support obligation. Id. at 552. We found the court

did not err in including the appellant’s 2003 corporate distribution in his

2003 net income.

     The Spahr Court observed that the husband had manipulated his

cash-flow in order to reduce his 2003 income.     First, he paid all his 2003

taxes in 2003, without deferring his payment for the fourth quarter of 2003

until April of 2004, as had been his customary practice.    Id. at 553.   By

paying his 2003 taxes before his actual tax liability was ascertained, the

husband overpaid, thus lowering his 2003 net income, and did not receive a

refund for that overpayment until 2004.         Second, the husband also

attributed his 2002 fourth quarter payment to 2003 since it was paid in April

of 2003. Hence, he had reduced his 2003 income by manipulating his tax

payments. We noted, “it may be important to trace cash flow in this way for

various business purposes, but determination of income for support is not

one of them.” Id. We added that “Pennsylvania case [law] does not accept

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the cash flow argument . . . We could not permit an individual to overpay his

taxes all year, and then exclude the amount of his overpayment from

calculation of that individual’s income.” Id. Thus, we concluded,

     [A]ll taxes connected to one year of income are calculated for
     that year, no matter when paid. To do otherwise would allow
     serious manipulation of yearly income. The court does not find
     that [husband] has attempted such a manipulation, but the
     effect of his case flow analysis produces the same result. For
     support purposes, tax liability must be attributable to the
     year the income is earned and tax liability is accrued, no
     matter when the tax payment is made.

Id. (emphasis added).     In addition, we found that corporate distributions

made to relieve a party of his tax liability are income for the purposes of

support. Id.

     Our holding in Spahr, supra, is controlling. Instantly, Father used a

2014 corporate distribution from his company to satisfy a $373,741 tax

obligation from 2013. While the trial court deducted the $373,741 from its

assessment of Father’s net income for 2014, thereby reducing that income,

the court’s conclusion is contrary to precedent.    Pursuant to Spahr, the

disbursement was income for the purpose of support for the year 2014. His

tax liability, on the other hand, should have counted against his 2013 net

income, regardless of when Father paid those taxes. Hence, the trial court

misapplied the law in relying on the cash-flow method advocated by Father’s

expert witness and subtracting Father’s 2013 tax payments in its calculation

of his 2014 net income.



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        Next, Mother argues that the trial court erred in failing to make the

effective date of the support order retroactive to when Father first failed to

report a change in his income, which supposedly occurred on January 1,

2013. We note, “parties to a support proceeding are duty bound to report

material changes affecting support.”           Krebs v. Krebs, 944 A.2d 768, 774

(Pa.Super. 2008) (citation omitted); see 23 Pa.C.S. § 4353(a).4 The party

seeking modification of a support order bears the burden of proving a

modification is warranted and that he promptly filed a modification petition.

Krebs, supra, at 774.         Generally, the order modifying a support order is

retroactive to the date the modification petition was filed.       Id.   However,

where a misrepresentation has occurred, “the court may order a modification

of arrearages retroactive to the date a party first misrepresented income if


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4
    Under 23 Pa.C.S. § 4353,

        An individual who is a party to a support proceeding shall notify
        the domestic relations section, the department and the other
        parties in writing or by personal appearance within seven days of
        any material change in circumstances relevant to the level of
        support or the administration of the support order, including, but
        not limited to:

        (1)   change of employment; and

        (2)   change of personal address or change of address of any
              child receiving support.

23 Pa.C.S. § 4343(a).



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the other party promptly filed a modification petition upon discovery of the

misrepresentation.” Id. at 774-775; see 23 Pa.C.S. § 4352(e).5

        Mother alleges the increase in Father’s income triggered his duty to

report the change and that he failed to do so. Hence, she asserts the court

erred in failing to make the modified support order retroactive to January

2013, when Father purportedly became duty-bound to notify the domestic

relations office of his increased income.

         In denying retroactive application, the trial court determined that the

evidence proffered by Mother was insufficient to establish that the alleged

increase in Father’s income triggered his duty to report the change.        The

court observed that the prior 2008 support order did not reference the

parties’ income, but rather, only cited to Melzer v. Witsberger, 480 A.2d
____________________________________________


5
    Section 4352 reads, in pertinent part,

        (e) Retroactive modification of arrears.—No court shall modify
        or remit any support obligation, on or after the date it is due,
        except with respect to any period during which there is pending
        a petition for modification. If a petition for modification was
        filed, modification may be applied to the period beginning on the
        date that notice of such petition was given, either directly or
        through the appropriate agent, to the obligee or, where the
        obligee was the petitioner, to the obligor. However, modification
        may be applied to an earlier period if the petitioner was
        precluded from filing a petition for modification by reason of a
        significant physical or mental disability, misrepresentation of
        another party or other compelling reason and if the petitioner,
        when no longer precluded, promptly filed a petition.

23 Pa.C.S. § 4352(e).



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991 (Pa. 1984), for the proposition that “the parties’ combined income

exceeds $20,000.00 net per month.” Opinion, 9/2/15, at unnumbered 11.

As such, the court had no basis in the record for determining when Father

realized a material change in his income. Alternatively, the court concluded

that Mother had failed to introduce evidence that Father had misrepresented

his income or that she was unaware that Father had completed a business

deal that would generate additional income. Upon review of the record, we

find that the trial court did not abuse its discretion in declining to apply the

support order retroactive to January 2013.

      As noted supra, Mother filed a petition for modification on February 11,

2015. During the subsequent hearing, Father stated that he had purchased

his partner’s interest in Diversified Traffic Products in March 2012. Father

did not testify that the acquisition produced an immediate return that

increased his income. Likewise, while Mother insinuated that Father realized

an immediate increase in his income, she neglected to introduce any

evidence in support of that proposition.     Indeed, Mother failed to adduce

any evidence in regards to Father’s alleged increased earnings after he

became the sole proprietor of Diversified Traffic Products, when she became

aware of that increase, or whether Father had concealed the increase from

her. Moreover, the certified record did not establish a material increase on

its face.   As Mother did not carry her burden of proving that retroactive

application was warranted, the trial court did not abuse its discretion. See

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Sirio v. Sirio, 951 A.2d 1188, 1200 (Pa.Super. 2008) (affirming denial of

retroactivity where party knew of potential for increase in income in 2002

and failed to file a petition for modification until 2005).

      We now address the sole issue Father raised in his cross-appeal, “Did

the trial court err by failing to allow any income of the business enterprise

owned by [Father] to be retained by the business for future investment?”

Father’s   brief   at   unnumbered    1.    Father   asserts   that   the   court’s

determination of his income for the purpose of child support should allow

him to retain some percentage of his earnings to support the growth of his

business. However, Father did not develop this argument and failed to cite

to any authority in support of this contention. Hence, it is waived. R.L.P. v.

R.F.M., 110 A.3d 201, 208-209 (Pa.Super. 2015) (finding issue waived

where party failed to cite any legal authority in support of claim); see

Pa.R.A.P. 2119(a). Indeed, Father concedes that the law is contrary to his

position. Father’s brief at unnumbered 13.

       Having determined that the trial court abused its discretion in

calculating Father’s 2014 net income, we remand this matter for the trial

court to calculate that income consistent with this decision.

      Order reversed. Case remanded. Jurisdiction relinquished.




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Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 1/12/2017




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