J-S92013-16


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

SHERRI ADELKOFF,                                IN THE SUPERIOR COURT OF
                                                      PENNSYLVANIA
       Appellee

                     v.

STEVEN ADELKOFF,

       Appellant                                     No. 711 WDA 2016


                     Appeal from the Decree April 25, 2016
              In the Court of Common Pleas of Allegheny County
                   Family Court at No(s): FD 13-008242-016


BEFORE: SHOGAN, MOULTON, and STRASSBURGER,* JJ.

MEMORANDUM BY SHOGAN, J.:                            FILED APRIL 21, 2017

       Appellant, Steven Adelkoff (“Husband”), purports to appeal from the

trial court’s equitable distribution order dated January 12, 2016, as modified

by the trial court’s order of February 10, 2016, granting in part and denying

in part Husband’s motion for reconsideration. The orders were made final by

the entry of the divorce decree between Husband and Sherri Adelkoff

(“Wife”) on April 25, 2016.1 After careful review, we affirm in part, vacate in

part, and remand for additional proceedings.


*
    Retired Senior Judge assigned to the Superior Court.
1
   The caption incorrectly noted the appeal was from the February 10, 2016
order granting in part and denying in part Husband’s motion for
reconsideration. However, a pre-divorce decree distributing marital property
is interlocutory and cannot be reviewed until it has been rendered final by
the entry of a decree in divorce. Wilson v. Wilson, 828 A.2d 376, 378 (Pa.
Super. 2003) (citation omitted). We have amended the caption to reflect
that the appeal properly lies from the entry of the divorce decree.
J-S92013-16



      The trial court summarized the factual background and procedural

history as follows:

            [Husband] and [Wife] were married on March 6, 1994.
      The parties signed a prenuptial agreement before their date of
      marriage. The agreement specified that the parties’ separately-
      owned property acquired before the marriage would remain their
      separate property. No children were born of the marriage. The
      parties separated on September 12, 2013. Their marriage lasted
      approximately nineteen (19) years.

             The procedural history of this case is extensive. The
      [c]ourt will discuss only the relevant case history here. Wife
      initiated this action by filing a Complaint in Divorce on November
      6, 2013. Wife’s Complaint raised claims for divorce, alimony
      pendente lite/spousal support, alimony, equitable distribution
      and counsel fees, costs and expenses. On November 12, 2013
      Wife filed a Petition for a Temporary Protection from Abuse Order
      (“TPFA”) against Husband, which was granted. The pending PFA
      Petition was disposed of on December 3, 2013 when the parties
      reached a Consent Order of Court. The Order granted Wife
      exclusive possession of the marital residence. Husband agreed to
      pay Wife $3,000.00 per month in alimony pendente lite.

             On March 10, 2015 Wife presented a Petition for Injunctive
      Relief wherein she alleged that the company partly-owned by
      Husband, International Electric Power, LLC (“IEP”), had a
      successful business venture in the Cayman Islands. Wife alleged
      that Husband had received a substantial amount of money as a
      result of the Cayman Islands deal and requested that any such
      money be deposited into an escrow account pending equitable
      distribution. The [c]ourt denied Wife’s request.

            A three (3) day equitable distribution hearing was
      scheduled for September 24 & 25, 2015 and October 1, 2015.
      Additional testimony was required to develop a complete record.
      The hearing continued on October 6, 14 & 30, 2015. The [c]ourt
      issued a Findings of Fact and Order of Court on January 12, 2016
      disposing of the parties’ pending economic claims. The [c]ourt
      found that Husband’s ownership interest in IEP was marital
      property and that its value could not be determined. The [c]ourt
      also found that the parties’ mar[it]al assets that could be valued


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     were worth a total of $1,365,884.09. The [c]ourt awarded each
     party 50% of the marital estate. Husband was ordered to hold
     his IEP membership units as a fiduciary in a constructive trust on
     behalf of both parties. Husband was ordered to pay Wife a sum
     equal to 50% of all distributions, dividends, proceeds and excess
     return of capital received as a result of ownership of the
     Membership Units.

            The [c]ourt found that Husband had an earning capacity of
     $300,000.00 per year. The [c]ourt found that Wife had an
     earning capacity of $81,000.00 per year. Husband was ordered
     to pay Wife alimony pendente lite in the amount of $4,240.00
     per month retroactive to November 19, 2013. Husband was
     ordered to pay Wife $3,000.00 per month in alimony for a period
     of five (5) years following the issuance of a divorce decree.

           On February 5, 2016 Husband presented a Motion for
     Reconsideration of the [c]ourt’s January 12, 2016 Order.
     Husband requested that the [c]ourt reconsider its findings that
     Husband’s ownership interest in IEP was marital and that the IEP
     interest could not be valued.          Husband requested that the
     [c]ourt modify several sections of its order including:          (1)
     requiring Husband to hold the IEP membership units in
     constructive trust for both parties; (2) awarding Wife a sum
     equal to 50% of all distributions, dividends, proceeds and excess
     return of capital that Husband has received or will receive as a
     result of ownership of the IEP units; (3) requiring Husband to
     pay all capital calls, liabilities and taxes associated with the IEP
     membership units and be subsequently reimbursed; (4)
     awarding Wife alimony pendente lite and alimony; and (5)
     awarding Wife counsel fees. The [c]ourt issued an order on
     February 10, 2016 granting Husband’s Motion in part. The
     [c]ourt ordered that Husband: (1) be reimbursed for any and all
     capital calls, liabilities and taxes associated with the IEP
     membership units prior to any distribution paid to Wife; (2)
     withhold a reasonable amount owed to Wife for ongoing
     obligations, contractual liabilities and relevant taxes; (3) pay
     Wife alimony pendente lite until his appeal is resolved; and (4)
     immediately implement all aspects of the [c]ourt’s January 12,
     2016 Order not addressed in Husband’s Motion for
     Reconsideration. Husband timely filed his Notice of Appeal of the
     [c]ourt’s January 12, 2016 Order of Court as modified by its
     February 10, 2016 Order.



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Trial Court Opinion, 7/7/16, at 1–3 (footnote omitted).

      Husband presents the following questions for appellate review:

      1. Whether the trial court erred as a matter of law in its
      treatment of Husband’s interest in International Electric Power,
      LLC (“IEP”):

           a. by finding that his interest     was marital property in
           violation of the language and       intent of the prenuptial
           agreement and in violation of       the precedent regarding
           short-term transfers into and out   of marital accounts;

           b. assuming arguendo that his interest was marital, by
           failing to assign any value to his interest when that
           interest should have been valued as of the date of
           separation;

           c. assuming arguendo that his interest was marital, by
           imposing a constructive trust on his interest in IEP for an
           unlimited duration of time; and

           d. by failing to interpret the Operating Agreement of IEP
           as causing Wife to hold a Class B interest in IEP when the
           Court awarded 50% of Husband’s interest in IEP to Wife
           pursuant to a constructive trust.

      2. Whether (a) the trial court erred as a matter of law when
      awarding Wife alimony and alimony pendente lite based on
      earnings from Husband’s interest in IEP while also awarding Wife
      50% of Husband’s entire interest in IEP and (b) reinstating
      Wife’s alimony pendente lite award during the appeal without
      requiring a showing of need and failing to consider the
      substantial marital estate Wife has already received.

Husband’s Brief at 3.

      Our standard of review of awards of equitable distribution is well

settled:
           A trial court has broad discretion when fashioning an
      award of equitable distribution. Our standard of review when
      assessing the propriety of an order effectuating the equitable


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     distribution of marital property is whether the trial court abused
     its discretion by a misapplication of the law or failure to follow
     proper legal procedure. We do not lightly find an abuse of
     discretion, which requires a showing of clear and convincing
     evidence. This Court will not find an abuse of discretion unless
     the law has been overridden or misapplied or the judgment
     exercised was manifestly unreasonable, or the result of
     partiality, prejudice, bias, or ill will, as shown by the evidence in
     the certified record. In determining the propriety of an equitable
     distribution award, courts must consider the distribution scheme
     as a whole. We measure the circumstances of the case against
     the objective of effectuating economic justice between the
     parties and achieving a just determination of their property
     rights.

Reber v. Reiss, 42 A.3d 1131, 1134 (Pa. Super. 2012) (quoting Biese v.

Biese, 979 A.2d 892, 895 (Pa. Super. 2009)).

     Husband first challenges the trial court’s designation of Husband’s

ownership interest in International Electric Power, LLC (“IEP”) as marital

property. More specifically, Husband contends that he used funds from his

trust account to purchase the IEP stock, and, therefore, the stock is his

separate property not subject to equitable distribution under the terms of

the prenuptial agreement. The trial court disagreed, as follows:

            Husband acquired a 15% ownership in IEP consisting of
     200,000 units of Class A stock in exchange for $15,000.00 paid
     via check #168 dated October 15, 2010 and cashed on October
     26, 2010. Check #168 was written from the parties’ jointly-
     titled account #9655. Husband transferred $30,000.00 from his
     separate trust account into account #9655 on October 13,
     2010.[2]    Husband used $15,000.00 from that account to
     purchase the IEP stock. Ex. 9. No writings were generated
     regarding the separate or marital character of the $15,000.00

2
   The actual date of the transfer is October 15, 2010. N.T., 10/6/15, at
685; Exhibit 9—Tracing and Analysis of Transfers from [Husband] to the
Joint Marital Account (Schedule 1).


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     used to purchase the stock. Because the IEP stock was acquired
     during the marriage, it is presumed to be marital property.
     Husband bears the burden of overcoming this presumption by
     showing that the IEP stock was acquired in exchange for his
     separate property. 23 Pa.C.S.A. §3501(b).

           The [c]ourt found that Husband’s lack of effort to
     segregate the $15,000.00 evidenced his intent to gift it to the
     marriage. Husband argued in his Motion for Reconsideration that
     he did not take steps to segregate the $15,000.00 used to
     purchase the stock because he relied on the language in the
     prenuptial agreement to maintain the separate character of the
     $15,000.00 after its deposit into a marital account without the
     need for a writing. Husband’s trust account is indisputably his
     separate property under the prenuptial agreement.                The
     prenuptial agreement states that “at no time during or after the
     marital relationship shall [one party have an interest in the
     other’s] Separate Property [and at no time during or after the
     marital relationship shall there be any commingling of any of
     their Separate Property] interest into jointly owned property or
     into marital property except as the parties shall specifically agree
     as evidenced by a written agreement.” Prenuptial Agreement at
     2. Husband argues that because the prenuptial agreement
     protected the $15,000.00 from becoming marital property due to
     commingling, it retained its separate character after being
     deposited into the joint account.

           The [c]ourt noted in its Findings of Fact that Pennsylvania
     has rejected the “transmutation” theory, which transforms
     ownership of separate property into marital property if there is
     any commingling of the two. Winters v. Winters, 512 A.2d 1211,
     1215 (Pa. Super. 1986). The [c]ourt did not, therefore, find that
     the $15,000.00 was marital property due to commingling or
     transmutation. The [c]ourt’s finding, therefore, is not contrary
     to the prenuptial agreement’s protection against commingling.

           The parties’ prenuptial agreement states that “[m]arital
     property, as used herein, shall mean: [...] (v) any gifts from any
     source made to or titled in the name of both parties.” Under
     Pennsylvania case law a spouse gifts his separate property to the
     marriage when he has donative intent, the property is delivered
     and the property is accepted. Lowry v. Lowry, 544 A.2d 972,
     977 (Pa. Super. 1988). On October 1[5], 2010[,] $30,000.00
     was delivered and accepted into the parties’ jointly-titled account


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     #9655. Ex. 9. The question, therefore, is whether [H]usband
     intended all $30,000.00 of his separate property deposited into
     the joint account to be a gift to the marriage. Donative intent is
     the “intention to make an immediate gift.” Wagner v. Wagner,
     466 Pa. 532, 537 (1976), quoting In re Parkhurst Estate, 402 Pa.
     527, 531 (1961).

            Husband’s intention to make an immediate gift of the
     $30,000.00 transfer from his trust to the jointly-titled account is
     evidenced by the immediate use of the money for marital
     purposes and Husband’s history of making such gifts to the
     marriage.      Wife testified that the money deposited from
     Husband’s trust account into joint account #9655 was routinely
     used for marital expenses including vacations, home
     improvement, jointly-filed taxes, pool service and window
     cleaning for the marital residence, Wife’s medical costs and
     Husband’s life insurance. Tr. at 176-79. Ex. 9. Wife credibly
     testified that Husband deposited money from his trust into joint
     account #9655 multiple times during the marriage to overcome
     a shortfall and pay marital expenses. Id. Husband intended for
     such transfers to be used for marital expenses as stated in an
     email from Husband to Wife dated August 23, 2013. Tr. at 182-
     83; Ex. 6F. Husband testified that the parties were able to
     sustain their lifestyle after a decrease in his income that started
     in 2009 because he supplemented their cash flow with money
     from his trust. Tr. at 869-70. . . .

           Husband transferred $30,000.00 from his trust account to
     the joint account #9655 on October 15, 2010. Husband argues
     that $15,000.00 from the October 15, 2010 [transfer] remained
     his separate property from the date of the transfer into the
     marital account until IEP cashed check #168 on October 26,
     2010. Immediately following the transfer of $30,000.00 from
     Husband’s trust account on October 15, 2010 the following
     expenses were paid from account #9655: cash withdrawals,
     payments to animal hospitals, gas stations, grocery stores,
     restaurants, hair salons, pharmacies, a pet store, a parking
     garage and a wine store and a mortgage payment. Ex. 9.
     Husband did not argue against classifying these as marital
     expenses. . . .

           Husband testified that he used joint account #9655 as a
     conduit to move $15,000.00 of his separate property from his
     trust account to IEP. Tr. at 995. He testified that he did not


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      have a checkbook for his trust account, did not ask his father for
      his trust account’s checkbook, did not know how to obtain a
      “starter check,” and did not know how to wire the money directly
      from the trust account to IEP. Tr. at 999-1002. At the time of
      trial, Husband was employed as General Counsel and Chief
      Financial Officer of IEP.      His duties included structuring
      international and domestic project financing and negotiating
      equity and debt financing. Tr. at 1009. Husband worked as an
      equity partner for K&L Gates, an international law firm, where he
      developed expertise in black box transactions, off-balance sheet
      financing and Shariah-compliant investment platforms. Tr. at
      1011-1012. Husband received an M.B.A. from Cornell. He has
      been working with financial transactions at a high level for over
      twenty (20) years. The [c]ourt did not find his testimony that he
      did not know how to write a check or transfer money directly
      from his trust account to IEP credible. The [c]ourt has no doubt
      that Husband would have segregated the $15,000.00 used to
      buy his interest in IEP if he so desired. His lack of action to
      segregate the funds is evidence that he intended to gift the
      entire $30,000.00 transfer to the marriage.

             The [c]ourt did not find Husband’s testimony regarding his
      lack of intention to gift the $30,000.00 to the marriage credible.
      The exhibits and credible testimony show a history of Husband
      gifting money from his trust account to the marriage. The
      [c]ourt’s conclusion that Husband gifted the $30,000.00 transfer
      to the marriage is fully supported by the record and must stand.

Trial Court Opinion, 7/7/16, at 5–9.

      After careful review, we conclude that the trial court’s disposition of

this issue is supported by the record and the relevant law.     As described

above, the trial court first found that Husband’s failure to segregate the

$15,000.00 from other funds in Account # 9655 “evidenced his intent to gift

it to the marriage.”   Trial Court Opinion, 7/7/16, at 5.   Second, the trial

court relied upon Lowry v. Lowry, 544 A.2d 972, 977 (Pa. Super. 1988),

for the proposition that Pennsylvania law provides that “a spouse gifts his



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separate property to the marital estate when he has donative intent, the

property is delivered and the property is accepted.”    Trial Court Opinion,

7/7/16, at 6. Thus, the trial court examined the October 15, 2010 transfer

of funds to Account # 9655 and concluded that Husband’s donative intent to

gift the marriage was established by Husband’s “immediate use of the

money for marital purposes and Husband’s history of making such gifts to

the marriage.”   Id. at 7.   Third, the trial court credited Wife’s testimony

concerning the numerous times between May 2010 and March 2013 that

Husband transferred money from his trust account to Account # 9655 to pay

for marital expenses and noted that Husband did not argue against

classifying certain enumerated expenses as marital.        Id. at 7–8.     In

contrast, the trial court rejected Husband’s testimony that “he used joint

account #9655 as a conduit to move $15,000.00 of his separate property

from his trust account to IEP.” Id. at 8. Given that Husband had an MBA

from Cornell, had been an equity partner at K & L Gates, was General

Counsel and Chief Financial Officer at IEP, and had over twenty years of

experience dealing with complex financial transactions, the trial court found

that Husband’s testimony that he intended the $15,000.00 utilized to

purchase the IEP stock to remain separate property lacked credibility. This

Court will not reverse credibility determinations as long as they are

supported by the evidence.    Morgante v. Morgante, 119 A.3d 382, 395

(Pa. Super. 2015).     The trial court’s reasons for rejecting Husband’s



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testimony are supported by the record, and we decline to revisit the trial

court’s credibility determinations.     Accordingly, Husband’s first argument

lacks merit.

      Husband next contends that, even if the trial court correctly included

the IEP stock in the marital estate, the trial court erred by failing to assign a

value to the stock and imposing a constructive trust of unlimited duration.

After careful review, we are compelled to agree.

      At trial, Husband and Wife each presented an expert witness to render

an opinion regarding the value of the IEP stock.        Wife’s expert, Richard

Brabender, testified that the IEP stock could not be valued based upon the

information available at the time of trial.         Husband’s expert, Joshua

Lefcowitz, utilized the asset accumulation method to value the stock as of

both the date of separation and the date of trial. Mr. Lefcowitz determined

that the IEP stock was worth $58,503.00 on the date of separation, and

$426,040.00 as of the date of trial.

      In the findings of fact issued after the trial on the parties’ economic

claims, the trial court summarily resolved the issue of the disputed value of

the IEP stock by “accept[ing] the testimony of Wife’s expert, Richard

Brabender, that the value of Husband’s IEP stock cannot be accurately

appraised at this time.” Findings of Fact and Order of Court, 1/12/16, at 12.

Husband challenged this finding in his motion for reconsideration, averring

that the trial court was required to offer an explanation for rejecting his



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expert’s opinion.   Husband thus requested the trial court to “adopt his

expert’s valuation of IEP or provide a detailed explanation as to why it did

not accept the valuation.”    Motion for Reconsideration, 2/5/16, at 6. He

further argues on appeal that the trial court should have accept his expert’s

valuation as of the date of separation.

      In its 1925(a) opinion, the trial court offered the following rationale

for crediting Wife’s expert, Mr. Brabender:

             In determining the value of marital assets, a court must
      choose a date of valuation which best promotes economic justice
      between the parties. Smith v. Smith, 904 A.2d 15, 18 (Pa.
      Super. 2006) (quotation marks and citations omitted). The
      Superior Court has noted that the general rule is to value marital
      assets as of the date of distribution. Id. [a]t 19. There are
      limited circumstances when it is proper to deviate from the
      general rule, such as when one party causes the asset to
      depreciate or be disposed of or when valuation as of the date of
      distribution is significantly more difficult than valuation as of a
      different date. Id. Husband did not argue in favor of or present
      evidence to support deviating from the general rule.           The
      [c]ourt, therefore, properly endeavored to value IEP as of the
      date of distribution.

                                    * * *

            Mr. Lefcowitz testified about his two (2) valuations for IEP:
      one (1) valuation as of the parties’ date of separation and one
      (1) valuation as of the date of trial.       For his date-of-trial
      valuation Mr. Lefcowitz [utilized] an asset accumulation method,
      which is commonly used to value holding companies. Although
      IEP was not a holding company, Mr. Lefcowitz analogized its
      operations to that of a holding company to explain his use of the
      asset accumulation method.         He chose to use the asset
      accumulation method because despite its stated purpose to build
      and operate power plants, none of IEP’s completed deals have
      resulted in the building or operation of power plants. Neither IEP
      nor its subsidiaries had any projects in the pipeline.          Mr.
      Lefcowitz opined that Husband’s shares of IEP were worth


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      $58,503.00 as of the parties’ date of separation and
      $246,040.00[3] as of the date of trial. He did not include an
      analysis of what drove the increase in value in his report or
      testimony. Mr. Lefcowitz testified that IEP was “significantly
      reliant on the attributes of the principals of the business.” He
      did not add any value contributed to the company by the “unique
      qualifications” of the principals.

             Mr. Brabender credibly opined that Mr. Lefcowitz’s date-of-
      trial valuation was inaccurate because it improperly assumed
      zero dollars in future cash flow for IEP. Mr. Brabender explained
      that omitting a value for future cash flow resulted in a liquidation
      value for IEP as opposed to a going concern value, which was
      improper because all indications were that IEP would continue to
      seek out business. Both experts agreed that the expertise,
      contacts and personal knowledge of IEP’s members were what
      generated its revenue. Mr. Lefcowitz, however, did not include
      any monetary value           for   the members’       nonmonetary
      contributions to IEP. Mr. Brabender credibly opined that this
      omission rendered Mr. Lefcowitz’s valuation inaccurate.

            Mr. Brabender reached the conclusion that Husband’s
      interest in IEP cannot be valued.             The court found
      Mr. Brabender’s     opinion     well-reasoned   and    credible.
      Mr. Brabender testified that the income approach was the most
      appropriate for IEP but that the lack of information regarding
      IEP’s future deals made it impossible for him to assign an
      accurate value. Mr. Brabender opined that the market approach,
      another valuation method, would not yield an accurate valuation
      for IEP because there were not enough comparable transactions
      from which to glean a reliable value.

            The [c]ourt carefully considered the testimony and report
      of each party’s expert. The [c]ourt found that Wife’s expert,
      Mr. Brabender, credibly opined that Husband's shares of IEP
      could not be accurately valued with the available information.
      The [c]ourt was within its discretion to credit the testimony of
      one expert and discard the testimony of another. The [c]ourt’s
      credibility determination must stand.


3
     It appears the trial court inadvertently transposed this figure.
Mr. Lefcowitz testified that the value of the IEP stock as of the date of trial
was $426,040.00. N.T., 10/6/15, at 1083.


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Trial Court Opinion, 7/7/16, at 9–11 (record references omitted).

      On appeal, Husband disputes the trial court’s observation that

Husband did not offer any evidence supporting a deviation from the general

rule that marital assets should be valued as of the date of distribution.

Husband claims that his position throughout the litigation was that the IEP

stock should be valued as of the date of separation, owing to the fact that

IEP’s largest and more lucrative projects were completed after the parties’

separation.   Finally, Husband asserts that the trial court’s rationale for

rejecting Mr. Lefcowitz’s expert opinion was not supported by the record.

Specifically, Husband contends that the trial court’s finding that a willing

hypothetical buyer would pay some amount to purchase upcoming IEP

projects was contradicted by Husband’s testimony that IEP did not have any

identified future projects and his    expert’s representation that no “prudent

hypothetical investor . . . would ascribe any value to future projects that

have not been identified.” N.T., 10/6/15, at 1138.

      As set forth above, a trial court has broad discretion when fashioning

an award of equitable distribution.    Childress v. Bogosian, 12 A.3d 448,

455 (Pa. Super. 2011). “Moreover, it is within the province of the trial court

to weigh the evidence and decide credibility and this Court will not reverse

those determinations so long as they are supported by the evidence.” Id.

(citing Sternlicht v. Sternlicht, 822 A.2d 732, 742 (Pa. Super. 2003)). In

applying these principles, we cannot conclude that the trial court erred in



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endeavoring to value the stock as of the date of distribution. Husband did

not present sufficient evidence, which the trial court found credible, to

support deviating from the general rule.

      Furthermore, Husband’s contention that the trial court erred in not

accepting his expert’s valuation opinion as of the date of distribution is

premised upon an incomplete summation of the reasons the trial court

doubted Mr. Lefcowitz’s testimony. In addition to accepting Mr. Brabender’s

critique of Mr. Lefcowitz’s date-of-trial valuation because it “improperly

assumed zero dollars in future cash flow for IEP,” the trial court noted that

Mr. Lefcowitz’s testimony and report “did not include an analysis of what

drove the increase in value” of the IEP shares between the date-of–

separation and the date-of-trial.   Trial Court Opinion, 7/7/16, at 10.     The

trial court also faulted Mr. Lefcowitz for not considering “any value

contributed to the company by the unique qualifications of the principals” in

light of the expert’s testimony that the value of IEP “was significantly reliant

on the attributes of the principals of the business.” Id. at 10–11 (internal

quotations and record references omitted). However, for similar reasons, we

are troubled by the trial court’s blanket acceptance of Mr. Brabender’s

position that the IEP stock could not be valued.

      First of all, Mr. Brabender opined that Mr. Lefcowitz’s date-of-trial

valuation was inaccurate because it assumed zero cash flow and that this

resulted in a liquidation value, as opposed to a going concern value.



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According to the trial court, Mr. Brabender further explained that this date-

of-trial was improper because “all indications were that IEP would continue

to seek out business.” Trial Court Opinion, 7/7/16, at 9-11. Secondly, Mr.

Brabender opined that Mr. Lefcowitz’s failure to assign any monetary value

to the members’ nonmonetary contributions to IEP rendered Mr. Lefcowitz’s

valuation inaccurate. Id. On the other hand, however, Mr. Brabender

concluded that “the lack of information regarding IEP’s future deals made it

impossible for him to assign an accurate value” based on the income

approach, which he testified was the most appropriate method of valuing the

IEP stock. Id.

      We recognize the difficulty the trial court faced in assigning a value to

this relatively new business as of the date of trial.      However, as noted

above, a trial court has broad discretion when fashioning an award of

equitable distribution. Childress, 12 A.3d at 455. Furthermore, the Divorce

Code does not specify a particular valuation method and the trial court is

free to accept all, part or none of the evidence offered as the correct value.

Id. at 456. It is clear that the trial court viewed this business as a going

concern. We thus conclude that the trial court erred in not assigning a value

as such.

      Also, the trial court’s acceptance of Mr. Brabender’s expert opinion

that IEP could not be valued led to the trial court’s problematic disposition of

Husband’s future obligations regarding the IEP membership units, to wit:



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             i. Husband as a fiduciary shall hold the Membership Units
      in constructive trust on behalf of both parties. The voting rights
      shall be exercised by Husband as a fiduciary.

              ii. Husband shall be responsible for paying all capital calls,
      liabilities and taxes associated with the Membership Units, for
      which he will be reimbursed as soon as practicable from the
      dividends, distributions and proceeds.

             iii. Husband shall pay Wife a sum equal to 50% of all
      distributions, dividends, proceeds and excess return of capital
      received as a result of ownership of the Membership Units that
      Husband has received during the pendency of this proceeding.

            iv. Husband shall pay Wife a sum equal to 50% of all
      future distributions, dividends, proceeds and excess return of
      capital received as a result of ownership of the Membership Units
      within ninety (90) days of receipt by Husband.

Findings of Fact and Order of Court, 1/12/16, at 22.

      In his motion for reconsideration, Husband objected to several aspects

of the trial court’s distribution of the IEP shares to a constructive trust.

Generally, Husband contended that the non-specified duration of the trust

precluded a final resolution of the parties’ economic issues and perpetuated

an ad infiniutm entanglement between the parties—an outcome disfavored

by the policy and intent of the Divorce Code. Husband also challenged the

trial court’s imposition of the constructive trust because: 1) the distribution

of the IEP shares to the trust violated IEP’s operating agreement; 2) it

required Husband to serve as a fiduciary to someone other than his

partners; 3) it risked IEP’s business opportunities if there is a disagreement

between Husband and Wife regarding the extent of Husband’s fiduciary

obligation to Wife; 4) it rendered Husband susceptible to perpetual discovery


                                     - 16 -
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and litigation with Wife and indentures Husband to Wife in perpetuity; and

5) it failed to account for any forfeiture event where Husband’s IEP shares

could convert to Class B, non-voting shares. Accordingly, Husband proposed

that the trial court wholly award him the IEP shares as part of a revised

equitable distribution order. Alternatively, Husband requested the trial court

to reconsider the portion of its order dictating Husband’s responsibility for all

capital calls, liabilities, and taxes associated with the IEP shares, but

providing that Husband shall be reimbursed for these costs from only future

IEP proceeds. Husband additionally asserted that, in the event he is entitled

to reimbursement of these costs, the amount must be paid to him prior to

any distribution of Wife. Finally, Husband urged the trial court to afford him

discretion to retain a reasonable portion of IEP distributions for ongoing

financial liabilities of the company.

      The trial court partially granted Husband’s motion for reconsideration,

as follows:

              a. Husband’s reimbursement for any and all capital calls,
      liabilities and taxes actually paid by Husband in prior and future
      deals associated with the Membership Units of [IEP] shall be paid
      to him prior to any distribution to [Wife];

            b. Husband shall have the discretion to hold back a
      reasonable portion of prior or future distributions, dividends,
      proceeds and excess return of capital due Wife in accordance
      with the Order dated January 12, 2016 for ongoing obligations,
      contractual liabilities and all relevant taxes;

           c. So long as Husband acts in good faith, Husband will
      have no liability to Wife related to decisions he makes
      concerning IEP. Husband is not required to suffer loss or subject


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      himself to liability or obligations as a result of being required to
      act as a fiduciary to Wife, so long as Husband acts in good faith;

             d. Husband may resign from IEP at any time he believes it
      is in his best interest. Husband may join or associate with any
      other business (as owner or employee) he believes in good faith
      is in his best interest. So long as Husband has acted in good
      faith, no portion of such future business, association or venture
      shall be considered in any way or manner marital property, and
      Wife shall have no interest whatsoever in any such future
      business, association or venture[.]

Order, 2/10/16, at 1–2.

      On appeal, Husband argues that the trial court’s modification did not

go far enough in addressing his concerns. Husband focuses his challenge on

the trial court’s imposition of the constructive trust, arguing that the trial

court erred when it “impos[ed] a constructive trust in his interest in IEP for

an unlimited duration of time without any showing of fraud, duress, undue

influence, mistake or other bad acts.” Pa.R.A.P. 1925(b) Statement, 6/8/16,

at 1–2. Husband also avers that legal error occurred when the trial court

“fail[ed] to interpret the Operating Agreement of IEP as causing Wife to hold

a Class B interest in IEP when the [c]ourt awarded 50% of Husband’s

interest in IEP to Wife pursuant to a constructive trust.” Id. at 2.

      To these allegations of error, the trial court responded:

            In his Concise Statement of Matters Complained of on
      Appeal Husband argues that the [c]ourt improperly imposed a
      constructive trust on the IEP interest “without any showing of
      fraud, duress, undue influence, mistake or other bad acts.”
      Husband did not previously make this argument to the [c]ourt
      and it should be deemed waived pursuant to Pa.R.A.P. 302(a).
      The [c]ourt assumes that Husband plans to argue that the
      [c]ourt could have imposed a constructive trust only if the


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     parties’ prenuptial agreement was invalidated due to fraud,
     duress, undue influence, mistake or other bad acts. Because the
     [c]ourt found that the prenuptial agreement’s provisions did not
     apply . . . the [c]ourt was able to order that the IEP units be
     held in a constructive trust without first invalidating the
     prenuptial agreement. The argument cannot be sustained.

           Husband complains that the [c]ourt erred by failing to
     interpret IEP’s Operating Agreement as causing Wife to hold a
     Class B interest in IEP when the [c]ourt awarded 50% of
     Husband’s interest in IEP to Wife pursuant to a constructive
     trust. Husband’s complaint plainly mischaracterizes the [c]ourt’s
     Order and should be denied.

           The [c]ourt heard Husband’s testimony about IEP’s
     Operating Agreement and reviewed the document.               IEP’s
     Operating Agreement contains a provision that transforms Class
     A stock into Class B non-voting stock upon its voluntary or
     involuntary transfer. Husband testified that he believes the
     transfer provision would cause any stock transferred to Wife in-
     kind to be downgraded to Class B non-voting stock. The [c]ourt
     agreed with Husband’s interpretation of the Operating
     Agreement on this point and did not order the IEP stock
     transferred in-kind to avoid that result. Husband also testified
     that he believed that if he were ordered to hold the stock in a
     constructive trust and pay Wife a portion of the proceeds
     received upon his sale of the IEP interest, the transfer provision
     of the Operating Agreement would be triggered and his stock
     would be downgraded to Class B non-voting stock.

            The [c]ourt did not find Husband’s self-serving testimony
     credible. The [c]ourt specified in its January 12, 2016 Order of
     Court that the IEP Membership Units would remain titled in
     Husband's name and that Husband would pay Wife a sum equal
     to all distributions and other income generated by his
     membership interest. The [c]ourt properly interpreted IEP’s
     Operating Agreement to preserve the Class A status of
     Husband’s Membership Units so long as Husband holds legal
     title. The [c]ourt’s Order should be sustained.

Trial Court Opinion, 7/7/16, at 11–13 (record references and quotation

marks omitted).



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      We first address the trial court’s finding of waiver of Husband’s

challenge to the imposition of the constructive trust and disagree that the

issue is waived for failure to present it to the trial court in the first instance.

It appears that the first time the concept of a constructive trust arose in this

litigation was after the trial court issued its January 12, 2016 Findings of

Fact and Order of Court.         Husband then timely filed his Motion for

Reconsideration outlining his objections to the distribution of the IEP stock to

the constructive trust, including that it frustrated the intent of the Divorce

Code. Motion for Reconsideration, 1/30/16, at ¶ 6(a). Husband, therefore,

did not waive review of this issue.4

      Additionally, we find merit in Husband’s position that the trial court’s

distribution of the IEP stock to a constructive trust constituted error.        As

noted, the trial court’s imposition of the trust was occasioned by its

acceptance of Wife’s expert’s opinion that the IEP stock could not be valued.

This resulted in the trial court’s unwieldly construct of a legal device that

financially obligated Husband to Wife for an unrestricted duration as regards

the IEP stock.




4
   The trial court presumed that Husband’s contest to the imposition of the
constructive trust was premised upon the validity of the parties’ prenuptial
agreement. See Trial Court Opinion, 7/7/16, at 12–13. However, Husband
did not refer to this agreement in his request that the trial court reconsider
its decision to impose the trust; rather, he claimed, inter alia, that the
unlimited duration of the trust was contrary to the policy of the Divorce
Code. The trial court did not address this argument.


                                       - 20 -
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        “One of the overarching purposes of the Divorce Code is to work

economic justice between the parties. 23 Pa.C.S. § 3102(a)(6).” Dean v.

Dean, 98 A.3d 637, 642 (Pa. Super. 2014). The open-ended nature of the

constructive trust, placing an onerous burden on Husband to remain

accountable to Wife indefinitely, does not effectuate the desired equitable

distribution of the marital assets.   Moreover, the trial court’s imposition of

the trust for an unspecified period implicates concerns related to deferred

distribution of marital assets. The Pennsylvania Supreme Court has decreed

that “[t]here are sound reasons to avoid the [deferred distribution] approach

due to its drawback of necessitating ongoing future proceedings and

preventing finality and certainty in the litigation.”    Fisher v. Fisher, 769

A.2d 1165, 1169 (Pa. 2001); see also Dean, 98 A.3d at 643 (the

advantages of immediate distribution are that “Husband and Wife would

avoid    further   entanglement   and    the   court    would   avoid   continued

involvement and enforcement.”).         Therefore, for the reason that the

unlimited duration of the constructive trust thwarts the goal of effectuating

economic justice between the parties, we conclude that the trial court

abused its discretion in imposing the trust.     As such, the matter must be

remanded to refashion the equitable distribution order.

        We are aware that our determination poses a quandary as to how the

trial court should proceed on remand.      As noted, the trial court concluded

that the IEP stock could not be valued and thus, devised the constructive



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J-S92013-16


trust remedy.     However, the trial court assumed that IEP was a going

concern when it imposed the constructive trust. Therefore, the matter is

remanded for a hearing on the value of the IEP stock as of the date of

distribution. Given the passage of time, information that was not available

in September and October of 2015 should now be available to the parties.

The trial court should direct that the valuation experts retained by the

parties be provided with all the necessary documentation and available

information to assess the value of IEP as a going concern on the date of

distribution. 5

      Husband’s second argument concerns the awards of alimony and

alimony pendente lite (“APL”) to Wife.       In its January 12, 2016 equitable

distribution order, the trial court decreed that “Husband shall pay Wife [APL]

in the amount of $4,240 per month beginning on February 1, 2016 and

continuing until a divorce decree has been filed.”     Order, 1/12/16, at 23.

The trial court also decided that “Husband shall pay Wife $3,000 per month

in alimony for a period of five (5) years following the issuance of a divorce

decree.” Id.

      In his motion for reconsideration, Husband requested the trial court to

order that his “alimony obligation begin February 1, 2016 and extend for a

5
    After the trial court renders its decision on the monetary worth of the
stock, it would be preferable in this situation that the interest in IEP be
distributed to Husband, with an offset to Wife. However, we recognize that
it is the role of the trial court to fashion the specifics of the equitable
distribution award. As such, we decline to address Husband’s argument
concerning the interpretation of the Operating Agreement of IEP.


                                    - 22 -
J-S92013-16


period of 5 years therefrom irrespective of the entry of the divorce decree.”

Husband’s Motion for Reconsideration, 2/5/16, at 10.6 After oral argument,

the trial court granted in part and denied in part Husband’s motion.      The

court denied Husband’s request regarding the starting date of his alimony

obligation.   Regarding APL, the trial court ruled that in the event that

Husband files an appeal to this Court: “The parties shall process a PACSES

order setting [APL] payable to Wife by Husband in the amount of $4,240 per

month, effective February 1, 2016 and continuing until the exhaustion of

appeals. . . .” Order, 2/10/16, at 2.

      Husband’s appellate challenge to the alimony and APL awards has two

components: 1) Wife’s alimony and APL amounts were impermissibly based

upon Husband’s interest in IEP, and 2) Wife failed to demonstrate a need for

APL. The trial court determined that Husband waived his first allegation of

error because he did not raise it in his motion for reconsideration.     See

Pa.R.A.P. 302(a) (“Issues not raised in the lower court are waived and

cannot be raised for the first time on appeal.”).      We agree and, thus,

address Husband’s final argument concerning the propriety of the trial

court’s alimony pendente lite award. The trial court explained its decision to

award Wife APL during the pendency of the appeal, as follows:



6
  As the trial court noted, Husband presented his reconsideration motion on
February 5, 2016, and the trial court granted the motion in part on
February 10, 2016. Trial Court Opinion, 7/7/16, at 3. The docket indicates
the motion was ultimately filed on June 1, 2016.


                                    - 23 -
J-S92013-16


             In his Motion for Reconsideration filed on February 10,
      2016 Husband asked the [c]ourt to terminate APL and begin
      alimony payments to Wife as of February 1, 2016. The [c]ourt
      denied his request and ordered that Husband continue to pay
      APL in the amount of $4,240.00 per month and defer alimony
      payments until the resolution of his appeal. Husband claims that
      the [c]ourt did not require Wife to demonstrate a need for APL or
      consider the substantial portion of the marital estate that she
      already received. Before making its ruling the [c]ourt carefully
      considered Wife’s financial situation in its nineteen (19) page
      Findings of Fact filed on January 12, 2016.        The [c]ourt’s
      analysis included consideration of each equitable distribution
      factor listed in 23 Pa.C.S.A. §3502(a) and a discussion of Wife’s
      vocational skills, employability, income and earning capacity.
      The [c]ourt properly found that, based on Wife’s financial
      situation and earning capacity, she was entitled to APL and
      alimony under the factors set forth in 23 Pa.C.S.A. §3701(b).
      The [c]ourt found Wife’s evidence demonstrating her need for
      APL and alimony credible.

             The [c]ourt carefully considered the equitable distribution
      factors listed in 23 Pa.C.S.A. §3502(a) before ordering the
      distribution of marital assets as set forth in its Order of January
      12, 2016.      Much of Wife’s award consisted of retirement
      accounts which may not be easily accessible for the purposes of
      funding Wife’s appeal defense. Wife had very limited separate
      financial resources. The [c]ourt was fully aware of the details of
      Wife’s equitable distribution award and financial situation before
      ruling that Wife shall receive APL until Husband’s appeal is
      resolved. Husband’s claim that the [c]ourt did not require a
      showing of need before awarding Wife APL during the pendency
      of the appeal fails to consider the [c]ourt’s diligence in
      fashioning the detailed equitable distribution Findings of Fact and
      Order of Court issued in this case.

Trial Court Opinion, 7/7/16, at 14.

      This Court has set forth our standard of review and summarized the

law with regard to the continuation of APL during an appeal as follows:

      Where an order regarding alimony pendente lite “is bolstered by
      competent evidence, the order will not be reversed absent an
      abuse of discretion by the trial court.” Jayne v. Jayne, [663


                                      - 24 -
J-S92013-16


      A.2d 169, 176 (Pa. Super. 1995)].            The obligation to pay
      alimony pendente lite “continues even after the entry of a final
      decree in equitable distribution when an appeal remains pending
      and terminates only after all litigation has ended.” Id. The right
      to receive alimony pendente lite during an appeal is not
      absolute, however; “alimony pendente lite may be terminated
      before the litigation is concluded where the recipient has
      acquired assets of income which sufficiently equalized the
      financial ability of the parties to pursue the action.” Id.

Brody v. Brody, 758 A.2d 1274, 1281 (Pa. Super. 2000). Additionally,

      [a]n appellate court’s standard of review in cases involving
      support matters is whether the trial court abused its discretion.
      An abuse of discretion exists when the judgment of the trial
      court is manifestly unreasonable or is the result of prejudice,
      bias or ill-will. While it is not an appellate court’s duty to create
      the record or assess credibility, we must nevertheless examine
      the existing record to ascertain whether sufficient facts are
      present to support the trial court’s order. If sufficient evidence
      exists in the record to substantiate the trial court’s action, and
      the trial court has properly applied accurate case law to the
      relevant facts, then we must affirm.

Hibbitts v. Hibbitts, 749 A.2d 975, 976-977 (Pa. Super. 2000) (internal

citations omitted).

      Husband contends that he should be discharged from his APL

obligation because Wife “has received substantial marital assets and is

receiving alimony.”     Husband’s Brief at 10.        Husband’s argument is

unavailing. First, it is not accurate that Wife is receiving alimony. The trial

court’s order on reconsideration specifically states that “alimony shall be

deferred until the resolution of the appeal.” Order, 2/10/16, at 2. Second,

the fact that the equitable distribution order awarded Wife a significant dollar

amount does not automatically mandate that her need for APL is



                                     - 25 -
J-S92013-16


extinguished. As set forth above, the trial court comprehensively explained

its rationale for continuing APL through the pendency of Husband’s appeal,

and we discern no abuse of discretion in the trial court’s ruling.7

      To conclude, we affirm the portion of the trial court’s decree that

designated the IEP shares as marital property and its award of alimony and

APL to Wife. We vacate the equitable distribution order in that it distributed

the IEP shares to a constructive trust of unlimited duration. The matter is

remanded for a hearing on the value of the IEP as a going concern as of the

date of distribution.   The trial court is directed to then craft an amended

equitable distribution award reflective of this economic adjustment.

      Decree affirmed in part, vacated in part, and remanded for further

proceedings consistent with this memorandum. Jurisdiction relinquished.

      Judge Moulton joins the Memorandum.

      Judge Strassburger files a Dissenting Memorandum.




7
   In his reply brief, Husband requests that in the event the APL award is
upheld he be credited for the thirty-day extension that Wife requested and
received to complete her appellate brief. Issues presented before this Court
for the first time in a reply brief are waived. See Pa.R.A.P. 2113 (scope of
the reply brief is limited to matters raised by appellee and not previously
addressed in appellant’s brief). Additionally, Husband has not demonstrated
that he made this request to the trial court. See Pa.R.A.P. 302(a) (“Issues
not raised in the lower court are waived and cannot be raised for the first
time on appeal.”).


                                     - 26 -
J-S92013-16




Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 4/21/2017




                          - 27 -
