J-A08012-17


                                  2017 PA Super 218

    KATHY M. CARNEY                            :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    DONALD R. CARNEY                           :
                                               :
                      Appellant                :   No. 2474 EDA 2016

                     Appeal from the Decree July 1, 2016
               In the Court of Common Pleas of Monroe County
             Domestic Relations at No(s): No. 793DR10 7123CV10


BEFORE:      PANELLA, J., LAZARUS, J., and STEVENS, P.J.E.*

OPINION BY STEVENS, P.J.E.:                                FILED JULY 11, 2017

        This is the second appeal to this Court in the divorce proceedings of

Appellant Donald R. Carney (“Husband”) and Appellee Kathy M. Carney

(“Wife”).    After remand, Husband again appeals the trial court’s order of

equitable distribution, arguing inter alia, that the trial court abused its

discretion in valuing the business Husband established during the parties’

marriage and in modifying Wife’s alimony pendente lite (“APL”) award. We

affirm in part, reverse in part, and remand for proceedings consistent with

this opinion.

        The parties married on April 3, 1986; after twenty-three years of

marriage, the parties separated on February 5, 2010. No children were born


____________________________________________


*
    Former Justice specially assigned to the Superior Court.
J-A08012-17



of the marriage.       During the marriage, Husband founded Brothers Auto

Transport (“Brothers”), a company that picks up new and used vehicles and

transports them throughout the country.          As of the date of the parties’

separation, Brothers was a thriving business with average gross sales of

approximately $9 million each year and a fleet of forty trucks.

       At one point, Wife worked at Brothers, assisting with administrative

tasks. Wife’s highest level of education was finishing eleventh grade. Wife

no longer works due to health problems, including rheumatoid arthritis,

lupus, and Raynaud’s Syndrome, which affects her hands.                Wife is

responsible for the care of her elderly mother and her intellectually disabled

brother.    Following the parties’ separation, Husband was required to pay

Wife $4,942.00 each month in APL and also pay for her health insurance.

       In the equitable distribution proceedings of the divorce litigation, the

key disputed issue was the valuation of the trucking business. Each party

retained two separate experts: 1) an asset valuation expert to value

Brothers’ trucks, trailers, and other tangible property, and 2) a business

valuation expert to calculate the overall value of the business itself.     We

note the parties also offered revised valuations of Brothers’ assets and its

overall value.1 Husband’s experts employed an income-based approach and
____________________________________________


1
  We note that Wife’s original asset valuation expert died suddenly before
the master’s hearing. After Wife retained a second asset valuation expert to
testify, she revised her valuation of Brothers to incorporate the new expert’s
valuation of Brothers’ truck fleet.



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J-A08012-17



valued Brothers at $1,000,000.00. Wife’s experts employed an asset-based

approach and valued Brothers at $1,978,328.00.         On June 20, 2012, the

Divorce Master issued a report and recommendation, finding Wife’s valuation

experts to be credible and Wife’s proposed valuation for Brothers to be most

reliable.   However, the Master never explicitly stated in his report the

specific value he adopted for Brothers.

      Husband filed exceptions to the Master’s determination regarding the

valuation of Brothers. The trial court adopted the Master’s recommendation

to use Wife’s proposed value for Brothers, but did not explicitly value the

business in its discussion of this specific issue. However, in its decision, the

trial court later indicates that it valued Brothers at $3,336,134. On February

15, 2013, the trial court entered a final divorce decree that incorporated the

property division.

      On appeal, this Court found the trial court’s valuation of Brothers was

“wholly unsupported by the record” as that specific figure was never offered

by Wife’s expert as a proposed value for Brothers, but instead was a

proposed valuation of the truck fleet that did not account for the company’s

liabilities and obligations.   Carney v. Carney, 843 EDA 2013, at *6

(Pa.Super. November 19, 2013) (unpublished memorandum).              Moreover,

Wife had withdrawn that figure from consideration after retaining her asset

valuation expert and submitting revised valuations. As a result, this Court

found that the trial court had abused its discretion in valuing Brothers, which

in turn, affected the overall equitable distribution award.   Thus, this Court

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remanded the case, directing the trial court to revisit the issue of Brothers’

valuation and reconsider the entire equitable distribution award in light of

this new value.

       After remand, the parties stipulated that the trial court could evaluate

all equitable distribution issues based upon testimony and evidence

presented at the previous evidentiary hearings.      In addition, Wife filed a

petition to modify her APL award. On January 25, 2016, the trial court held

a hearing to allow the parties to introduce additional evidence to supplement

the record.

       On July 1, 2016, the trial court entered an order and opinion setting

forth its equitable distribution award that divided the marital estate in a

50/50 ratio. The trial court found Wife’s valuation experts most credible and

adopted their valuation of Brothers at $1,978,328.00.           To avoid the

liquidation of Brothers, the trial court distributed the auto carrier business

solely to Husband. To equalize this distribution, the trial court awarded the

marital residence (valued at $100,400.00)2 and the marital 401(k) account

(valued at $331,620.00) to Wife and ordered Husband to pay Wife

$6,761.95 each month, interest free, for ten years.       The trial court also


____________________________________________


2
  While the marital residence has a fair market value of approximately
$244,400.00, it is encumbered by a lien of approximately $150,000.00,
which was utilized by the parties in 2006 to add improvements to the
property, including a garage, a putting green, a pool, a pool house, a
gazebo, two waterfalls, and landscaping.



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divided less valuable assets among the parties.             Moreover, the trial court

granted Wife’s petition to modify APL and increased her award to $12,000

each month.     Husband filed a timely appeal and a concise statement of

errors complained of on appeal.

      Husband raises the following issues for our review:

      1. Did the lower court commit an error of law and/or abuse its
         discretion by accepting Wife’s expert’s “calculated value” of
         the marital business which relied upon an adjusted asset
         approach rather than a fair market value which considers the
         ongoing concern of the marital business?

      2. Did the trial court commit an error of law and/or abuse its
         discretion in failing to tax effect the value of the marital
         business?

      3. Did the trial court commit an error of law and/or abuse its
         discretion by entering an equitable distribution award
         calculated upon an improper value of the marital business?

      4. Did the trial court commit an error of law and/or abuse its
         discretion by awarding alimony pendente lite to Wife based
         upon Husband’s post-separation income without considering
         Wife’s needs?

Husband’s Brief, at 4.

      Our   standard     of   review   in   reviewing   a    trial   court’s   equitable

distribution order is as follows:

      [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 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

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J-A08012-17


      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.

      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.     We are also aware that a master's report and
      recommendation, although only advisory, is to be given the
      fullest consideration, particularly on the question of credibility of
      witnesses, because the master has the opportunity to observe
      and assess the behavior and demeanor of the parties.

Morgante v. Morgante, 119 A.3d 382, 386–87 (Pa.Super. 2015) (quoting

Childress v. Bogosian, 12 A.3d 448, 455–56 (Pa.Super. 2011)) (internal

citations and quotation marks omitted).

      First, Husband challenges the trial court’s decision to adopt Wife’s

experts’ methods for the valuation of Brothers. Specifically, Husband argues

that his experts provided a more accurate valuation of Brothers using an

income-based method, which he characterizes as a generally accepted

standard of business valuation. Husband criticizes Wife’s experts for using

an asset-based methodology, which Husband characterizes as a subjective

methodology that did not assess the fair market value of the business.

      We begin by emphasizing that “[t]he Divorce Code does not set forth a

specific method for valuing assets, and consistent with our standard of

review, the trial court is afforded great discretion in fashioning an equitable

distribution order which achieves economic justice.” Mundy v. Mundy, 151


                                      -6-
J-A08012-17



A.3d 230, 236 (Pa.Super. 2016) (citation omitted).         In valuing marital

assets, “[t]he trial court must exercise discretion and rely on the estimates,

inventories, records of purchase prices, and appraisals submitted by both

parties.” Smith v. Smith, 904 A.2d 15, 21–22 (Pa.Super. 2006). However,

this Court has consistently held that, “[i]n determining the value of marital

property, the court is free to accept all, part or none of the evidence as to

the true and correct value of the property.”       Mundy, 151 A.3d at 236

(quoting Smith, 904 A.2d at 22).

      While Husband argues that the trial court should have viewed his

experts’ testimony utilizing an income based valuation as the preferred

valuation, we decline to adopt this protocol as the exclusive method for

determining business valuation. Our precedent requires that the trial court

be given great discretion to evaluate the parties’ valuation methods and

determine which is most reliable. Similarly, although Husband criticizes the

testimony of Wife’s expert witnesses who utilized a different asset-based

valuation method, Husband is asking this Court to substitute his viewpoint

for the credibility findings of the divorce master and the trial court.    We

reiterate that we defer to the factfinders’ discretion in weighing the evidence

and assessing the credibility of the witnesses.

      Moreover,   we   reject Husband’s suggestion      that Wife’s experts’

valuation method was inadequate to accurately calculate the value of the

parties’ trucking business.    Wife’s business valuation expert, David E.

Coffman, CPA, ABV, CFF, CVA, who is a certified public accountant as well as

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J-A08012-17



certified business evaluator by the American Institute of CPAs, testified as to

his extensive experience, having valued approximately 500 businesses,

including five or six trucking companies.         Coffman discussed various

methods of valuation and explained that he felt an asset-based valuation

method would most accurately calculate Brothers’ valuation as the trucking

company’s fleet of auto carrier trucks was particularly valuable and would

hold its value.   When asked why he did not use an income-based approach

as employed by Husband’s experts, Coffman rejected that approach as he

explained that it tends to overvalue companies by not accounting for

whether that business is actually operating efficiently.

      While Husband asserts that Wife’s experts failed to account for the

business’s fair market value, this argument is belied by the record. Coffman

provided a thorough explanation of how he analyzed comparable market

sales by utilizing a database for the specialized freight trucking industry

which reported on actual sales of auto carrier truck fleet businesses.       In

addition, Coffman performed his own valuation of the truck fleet by

consulting objective market data for each of the individual trucks in the fleet.

After accounting for depreciation of the operating equipment over time,

Coffman calculated the fleet value to be approximately $3.376 million.

      Coffman’s valuation of the truck fleet was consistent with the valuation

of Wife’s asset-valuation expert, Barry Rudiger, owner of East Coast Truck &

Trailer, a company with annual sales of auto transport trucks of $35 million

and a truck inventory worth $7 million. The divorce master was “extremely

                                     -8-
J-A08012-17



impressed” by Rudiger’s expertise and his “methodical” valuation method in

using objective data from NADA guide resources to value each truck in

Brothers’ fleet with their specific Vehicle Identification Number (VIN).

Master’s Report, 6/20/12, at 7.    Consistent with our precedent above, the

trial court was free to give weight to the master’s report, particularly with

respect to witness credibility, as the master had the opportunity to observe

and assess the behavior and demeanor of the parties. Morgante, supra.

As the trial court’s findings are supported by the evidence, we cannot find

that the trial court abused its discretion in adopting Wife’s valuation method

for the Brothers auto transport business.

      Second, Husband argues that the trial court erred in refusing to

consider the tax effect of awarding the parties’ auto transport business

solely to Husband.    The trial court summarily dismissed this argument,

explaining that it was not required to apply a tax effect value to any of the

marital assets as there was no evidence that the parties intended to sell any

of the assets. Trial Court Opinion, 7/1/16, at 11, n. 3. As a result, the trial

court assigned the entire trucking business to Husband and equalized this

distribution by requiring Husband to compensate Wife through a monthly

payment of $6,761.95 each month, interest free, for ten years.            This

calculation was based on Husband’s receipt of the full equity value of

Brothers without consideration of costs associated with a potential sale of

the business.




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J-A08012-17



      The Divorce Code lists eleven relevant factors in an equitable

distribution analysis, including the tax ramifications and expenses associated

with the sale of each marital asset.        23 Pa.C.S.A. § 3502(a).   Section

3502(a) provides, in pertinent part:

      3502. Equitable division of marital property

      (a) General rule.—Upon the request of either party in an action
      for divorce or annulment, the court shall equitably divide,
      distribute or assign, in kind or otherwise, the marital property
      between the parties without regard to marital misconduct in such
      percentages and in such manner as the court deems just after
      considering all relevant factors. The court may consider each
      marital asset or group of assets independently and apply a
      different percentage to each marital asset or group of assets.
      Factors which are relevant to the equitable division of marital
      property include the following:

                                   ***
      (10.1) The Federal, State and local tax ramifications associated
      with each asset to be divided, distributed or assigned, which
      ramifications need not be immediate and certain.

      (10.2) The expense of sale, transfer or liquidation associated
      with a particular asset, which expense need not be
      immediate and certain.

23 Pa.C.S. § 3502(a)(10.1), (10.2) (emphases added).

      In an analogous case, Balicki v. Balicki, 4 A.3d 654 (Pa.Super.

2010), this Court upheld the trial court’s equitable distribution order which

deducted tax ramifications and sale expenses from the valuation of a

husband's insurance agency business before assigning the asset solely to the

husband. Consistent with the statutory language in Section 3502, this Court

rejected the argument that tax ramifications and expenses associated with



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J-A08012-17



the sale, transfer, or liquidation of a marital asset are only relevant in an

equitable distribution determination if a sale of the asset is likely.

Specifically, this Court provided that:

      [this argument] violates the clear directive from the legislature
      to consider the tax ramifications and expense of sale, which
      “need not be immediate and certain.” ... It is crystal clear that
      the Legislature intended to stop the practice of the lower courts
      analyzing the prospect of sale of an asset [.] ... We believe the
      Legislature intends the assets simply be given the value they
      would have at distribution after deducting every expense
      necessary to achieve liquidation[.]...

      Wife also argues, correctly, that the statute requires us only to
      consider the tax ramifications and expense of sale along with
      numerous other listed factors, but the Divorce Code does not
      make a deduction for them mandatory. However, when we
      consider the tax ramifications and expense of sale associated
      with the marital interest in the insurance agency, we are
      convinced that deducting them is the fair and just method for
      valuing the insurance agency. Pursuant to our Equitable
      Distribution Award, Wife will receive $405,557 cash, without any
      tax consequences or other expense. This will be the largest asset
      that Wife will receive. The marital interest in the insurance
      agency is the largest asset Husband will receive, but it is a much
      different type of asset than cash. Husband cannot properly
      convert the marital interest in the insurance agency to cash
      without finding a potential purchaser, negotiating a written
      agreement containing the terms and conditions of the sale,
      consummating the sale and then paying income tax due as a
      result of the sale. Husband may incur expense of sale other than
      income tax, such as a broker's commission, finder's fee, attorney
      fees and accountant fees. Hence, Wife will have access at no
      cost to her largest asset, cash, while Husband's access to the
      cash value of his largest asset involves a potentially difficult and
      clearly costly process. Therefore, deducting the tax ramifications
      and expense of sale from the marital value of the insurance
      agency is certainly a fair way to divide this asset[.]




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J-A08012-17



Id. at 663–64 (citations omitted). Moreover, the Balicki Court also pointed

out that the husband might be forced to sell the insurance agency, given his

court-ordered obligation to make a large cash payment to his wife within one

year. See id.

      In the same manner, the equitable distribution order in this case

provides Husband with the entire auto transport business, which cannot be

converted to cash without incurring significant tax liability and expenses

associated with the sale process. In comparison, Wife will receive monthly

payments of cash without equivalent expenses. While the trial court avoided

considering the tax implications and expenses associated with Husband’s

need to sell Brothers in the future, this Court clearly held in Balicki that the

tax ramifications and expenses associated with the sale of a marital asset is

a relevant consideration whether a sale is likely or not. See id. at 663; see

also 23 Pa.C.S. § 3502(a)(10.1), (10.2). Therefore, the trial court erred in

failing to consider evidence related to the potential sale of the auto transport

business before assigning the asset to Husband.

      Lastly, Husband argues that the trial court erred in modifying Wife’s

APL award. Specifically, Husband claims that the trial court’s award is much

greater than Wife’s actual needs and results in a “windfall” to Wife.

      We review APL awards under an abuse of discretion standard.
      Haentjens v. Haentjens, 860 A.2d 1056, 1062 (Pa.Super.
      2004). APL is “an order for temporary support granted to a
      spouse during the pendency of a divorce or annulment
      proceeding.” 23 Pa.C.S.A. § 3103. APL “is designed to help the
      dependent spouse maintain the standard of living enjoyed while


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J-A08012-17


       living with the independent spouse.” Litmans v. Litmans, 449
       Pa.Super. 209, 673 A.2d 382, 389 (1996). Also, and perhaps
       more importantly, “APL is based on the need of one party to
       have equal financial resources to pursue a divorce proceeding
       when, in theory, the other party has major assets which are the
       financial sinews of domestic warfare.” Id. at 388. APL is thus
       not dependent on the status of the party as being a spouse or
       being remarried but is based, rather, on the state of the
       litigation. DeMasi v. DeMasi, 408 Pa.Super. 414, 597 A.2d
       101, 104–105 (1991). Alimony, in contrast, is terminated upon
       remarriage or cohabitation.      Id. at 104–105; see also 23
       Pa.C.S.A. § 3706. Since, however, the purpose of APL is to
       provide the dependent spouse equal standing during the course
       of the divorce proceeding, it does not come with the “sanction”
       of Section 3706. DeMasi, at 104–105. “APL focuses on the
       ability of the individual who receives the APL during the course
       of the litigation to defend her/himself, and the only issue is
       whether the amount is reasonable for the purpose, which turns
       on the economic resources available to the spouse.” Haentjens,
       at 1062; see also DeMasi, at 105.

Childress, 12 A.3d at 463 (quoting Schenk v. Schenk, 880 A.2d 633, 644–

45 (Pa.Super. 2005)).3

       Moreover, in reviewing a party’s request for a modification of the APL

award, courts must consider the following:

       In ruling on a claim for alimony pendente lite, the court should
       consider the following factors: the ability of the other party to
       pay; the separate estate and income of the petitioning party;
       and the character, situation, and surroundings of the parties.” An
       award of alimony pendente lite may be modified or vacated by a
       change in circumstances.... It is the burden of the party seeking

____________________________________________


3
  This Court has emphasized that a dependent spouse may continue to
receive APL through an appeal (including any remand) concerning matters of
equitable distribution until a final order has been entered. Schenk v.
Schenk, 880 A.2d 633, 647 (Pa.Super. 2005).




                                          - 13 -
J-A08012-17


      to modify an order of support to show by competent evidence
      that a change of circumstances justifies a modification.

Childress, 12 A.3d at 463 (quoting Busse v. Busse, 921 A.2d 1248, 1255

(Pa.Super. 2015) (internal citations omitted)).

      In light of this precedent, we find the trial court’s modification of Wife’s

APL award was justified by competent evidence. Wife testified that her sole

income is the APL award, which was previously set at $4,942.00 each

month.   However, Wife argues that this award is inadequate to meet her

needs as her monthly expenses are approximately $5,800.00 each month.

In comparison, Wife’s expert, Mr. Coffman, reviewed Husband’s financial

information and calculated his 2014 annual net income to be $680,352.00

(monthly net income of $56,969.00). Although the trial court noted that the

support guideline formula in Pa.R.C.P. 1910.16-4 suggested that Wife be

awarded $22,227.00 in APL each month, it found this amount was excessive

under the circumstances as Wife did not testify to any additional expenses or

needs.   Instead, the trial court modified Wife’s APL award to $12,000.00

each month, which it deemed appropriate to allow Wife to live independently

and to provide her with the resources to litigate this divorce action. As we

find this award to be reasonable, we reject Husband’s claim that the trial

court abused its discretion in modifying Wife’s APL award.

      For the foregoing reasons, we affirm the trial court's decree in all

respects except for its failure to account for the costs associated with the

potential sale of Brothers. Upon remand, we direct the trial court to hold a

hearing to assess both the tax ramifications and expenses associated with

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J-A08012-17



the potential sale of the auto transport business and reevaluate its equitable

distribution award accordingly.

      Decree affirmed in part and reversed in part.      Case remanded for

proceedings in accordance with this decision. Jurisdiction relinquished.
Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 7/11/2017




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