J-S53002-15

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37

S.J.W.,                                    :   IN THE SUPERIOR COURT OF
                                           :        PENNSYLVANIA
                  Appellee                 :
                                           :
            v.                             :
                                           :
G.H.W.,                                    :
                                           :
                  Appellant                :   No. 407 MDA 2015

            Appeal from the Order entered January 30, 2015,
                Court of Common Pleas, Lancaster County,
      Domestic Relations at No. 2014-02264 – PACSES No. 961114835

BEFORE: DONOHUE, OTT and MUSMANNO, JJ.

MEMORANDUM BY DONOHUE, J.:                          FILED AUGUST 21, 2015

      Appellant, G.H.W. (“Father”), appeals from the order entered on

January 30, 2015 by the Court of Common Pleas of Lancaster County,

increasing Father’s child support obligation to Appellee, S.J.W. (“Mother”),

for the parties minor child, C.J.W. (“Child”). For the reasons that follow, we

affirm in part and vacate in part the trial court’s support order.

      Mother and Father have one daughter, Child, age ten. Mother works

full-time for a temporary staffing service, with her current placement being

at a company called Compleat Restoration. Mother’s position with Compleat

Restoration could become permanent. Mother earns fifteen dollars per hour

and pays a babysitter $110.00 per week.          Father is the owner and sole

shareholder of several businesses. Specifically relevant to this case are Mine

Drilling Services, LLC (“MDS”) and J. Roy’s, Inc. (“J. Roy’s”), which provides
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Father with his primary source of income. On April 8, 2013, following the

dissolution of their marriage, Mother and Father entered into a postnuptial

agreement prior to this support matter.      According to their postnuptial

agreement, Mother received $2,500.00 per month in alimony and $1,500.00

per month in child support from Father.

     Mother initiated the instant matter on August 19, 2014 by filing a

complaint against Father for support of Child. On October 9, 2014, Mother,

with her attorney, and Father, pro se, appeared for a support conference.

On October 14, 2014, the trial court entered an order requiring Father to pay

Mother $1,354.27 per month in child support and $130.00 in arrears.

Pursuant to this order, Father was to provide medical insurance coverage for

Child, with Father to pay sixty-eight percent and Mother thirty-two percent

of unreimbursed medical expenses.

     On October 30, 2014, Mother filed exceptions to the trial court’s

October 14, 2014 order. On November 6, 2014, Mother petitioned the trial

court requesting that the court list this matter as complex. The trial court

granted Mother’s request and scheduled a hearing for January 28, 2015. On

January 22, 2015, Mother filed a motion for compliance because Father

failed to answer interrogatories and produce documents requested by Mother

on December 16, 2015. The same day, the trial court ordered Father to file

answers to the interrogatories and produce the documents requested.




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     On January 28, 2015, both parties appeared at the scheduled hearing,

Mother with counsel and Father once again pro se.      The trial court heard

testimony from both Mother and Father in addition to the testimony of

Mother’s witness, David M. Weiss, CPA (Weiss) of Simon Lever, an expert in

business valuation, who provided a report in the form of a financial analysis

of Father’s personal and business income (“the Weiss Report”). Weiss based

his testimony and report on Father’s 2013 tax return, the tax returns for

several of his businesses, including MDS and J. Roy’s, and Father’s October

9, 2014 pay stub.      Weiss concluded that Father had support income

available to him in the net amount of $344,890 per year, or $28,740.83 per

month.

     On January 30, 2015, the trial court issued a support order, pursuant

to Rule 1910.16-3.1 of the Pennsylvania Rules of Civil Procedure, which sets

forth support guidelines for high-income cases.    The trial court accepted

Weiss’ testimony as accurate and found Father’s monthly net income

available for support was $28,740.83, or $344,890 annually. According to

the January 30, 2015 order, Father was to pay Mother $2,968.27 per month

in child support effective September 19, 2014 and $3,006.06 effective on

December 1, 2014.1 Father still was to provide medical insurance coverage

for Child, with Father paying eighty-seven percent and Mother thirteen



1
  The two tiers were necessary because of an increase in childcare expenses
that Mother incurred.


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percent of any unreimbursed medical expenses for Child over $250.00 per

year.

        On February 26, 2015, Father filed a motion for reconsideration, which

the trial court denied the same day. On February 27, 2015, Father filed a

timely notice of appeal. On March 3, 2015, the trial court ordered Father to

file a concise statement of the errors complained of on appeal pursuant to

Rule 1925(b) of the Pennsylvania Rules of Appellate Procedure. On March

24, 2015, Father filed his timely Rule 1925(b) statement.

        On appeal, Father raises the following issues for our review and

determination:

             1.    The trial court’s reliance on the Weiss Report in
             its entirety is an abuse of discretion because it
             improperly includes an increased line of credit for
             [MDS] as cash available to [Father], while failing to
             review the business’ operational expenses.

             2.    The trial court abused its discretion by
             including the full purchase price of a 2013 Porsche,
             when Appellant’s W-2 provides for the use, resulting
             in a double-dip.

             3.    The trial court’s reliance on the Weiss Report in
             its entirety is an abuse of discretion because it
             includes depreciation for [J. Roy’s] as income to
             [Father] without determining whether the amount he
             receives increases as a result.

             4.    The trial court abused its discretion by entering
             the order of January 28, 2015, without requiring the
             parties to submit income and expense statements
             required by Pa.R.C.P. 1910.11(c)(2) and Pa.R.C.P.
             1910.16-3.1.




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Father’s Brief at 5.2

       Our standard of review when considering an appeal from a child

support order is as follows:

             When evaluating a support order, this Court may
             only reverse the trial court’s determination where the
             order cannot be sustained on any valid ground. We
             will not interfere with the broad discretion afforded
             the trial court absent an abuse of the discretion or
             insufficient evidence to sustain the support order. An
             abuse of discretion is not merely an error of
             judgment; if, in reaching a conclusion, the court
             overrides or misapplies the law, or the judgment
             exercised is shown by the record to be either
             manifestly unreasonable or the product of partiality,
             prejudice, bias or ill will, discretion has been abused.
             In addition, we note that the duty to support one’s
             child is absolute, and the purpose of child support is
             to promote the child’s best interests.

McClain v. McClain, 872 A.2d 856, 860 (Pa. Super. 2005) (internal

citations omitted). “A support order will not be disturbed on appeal unless

the trial court failed to consider properly the requirements of the Rules of

Civil Procedure Governing Actions for Support, Pa.R.C.P. 1910.1 et seq., or

abused its discretion in applying these Rules.”     Berry v. Berry, 898 A.2d

1100, 1103 (Pa. Super. 2006).

       For his first three issues on appeal, Father contends that the trial court

abused its discretion and misapplied the law because it determined, relying

on the Weiss Report, that his income available for child support was

$344,890 annually, or $28,740.83 per month. See Father’s Brief at 11-21.


2
    We have reorganized and renumbered Father’s issues for ease of review.


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First, Father argues that the Weiss Report improperly included a line of

credit worth $111,000 for MDS as cash available to Father. See id. at 12-

18.   Father contends that in doing so, the trial court acted contrary to

established Pennsylvania case law, as it would require him to pay his child

support obligation on credit, with funds that have to be repaid with interest.

See id. at 12-16. Father avers that this was improper because there was no

evidence introduced during the January 28, 2015 hearing that he used MDS

to shelter income and avoid his child support obligation.      Id. at 12-15.

Furthermore, Father asserts that the Weiss Report did not take into

consideration the expenditures, in addition to the debts, of MDS for which

Father might to use the line of credit to pay. Id. at 16-17. Thus, Father

asks us to remand this case to the trial court for a determination of his

income available for support without the inclusion of the $111,000 MDS line

of credit. Id. at 18.

      “Generally, the amount of support to be awarded is based upon the

parties’ monthly net income.” Pa.R.C.P. 1910.16-2. Our Court has stated,

“[i]n considering this matter, all reasoning must begin with an evaluation of

a parties’ income that is available for support. The assessment of the full

measure of a parent’s income for the purposes of child support requires

courts … to determine ability to pay from all financial resources.”   D.H. v.

R.H., 900 A.2d 922, 930 (Pa. Super. 2006) (citation and internal quotations

omitted).    Therefore, “[w]hen determining income available for child



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support, the court must consider all forms of income.” Berry, 898 A.2d at

1104 (citation and internal quotations omitted); see Pa.R.C.P. 1910.16-2(a).

The Domestic Relations Code defines the term “income” as follows:

           “Income.” Includes compensation for services,
           including, but not limited to, wages, salaries,
           bonuses, fees, compensation in kind, commissions
           and similar items; income derived from business;
           gains derived from dealings in property; interest;
           rents; royalties; dividends; annuities; income from
           life insurance and endowment contracts; all forms of
           retirement; pensions; income from discharge of
           indebtedness; distributive share of partnership gross
           income; income in respect of a decedent; income
           from an interest in an estate or trust; military
           retirement benefits; railroad employment retirement
           benefits; social security benefits; temporary and
           permanent        disability     benefits;      workers’
           compensation; unemployment compensation; other
           entitlements to money or lump sum awards, without
           regard to source, including lottery winnings; income
           tax refunds; insurance compensation or settlements;
           awards or verdicts; and any form of payment due to
           and collectible by an individual regardless of source.

23 Pa.C.S.A. § 4302.

     Importantly, in regards to business income, this Court has held:

           Support orders “must be fair, non-confiscatory and
           attendant to the circumstances of the parties.”
           Fennell v. Fennell, 753 A.2d 866, 868 (Pa. Super.
           2000).    “When a payor spouse owns his own
           business, the calculation of income for child support
           purposes must reflect the actual available financial
           resources of the payor spouse.”       Fitzgerald v.
           Kempf, 805 A.2d 529, 532 (Pa. Super. 2002)
           (internal quotation marks omitted). Further, “all
           benefits flowing from corporate ownership
           must be considered in determining income




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              available to calculate a support obligation.”
              Fennell, supra at 868 (emphasis added).

Spahr v. Spahr, 869 A.2d 548, 552 (Pa. Super. 2005) (emphasis in

original). Additionally,

              [o]ur jurisprudence is clear, therefore, that the
              owner of a closely-held corporation cannot avoid a
              support obligation by sheltering income that should
              be available for support by manipulating salary,
              perquisites,    corporate      expenditures,    and/or
              corporate distribution amounts. By the same token,
              however, we cannot attribute as income funds not
              actually available to or received by the party.

Fennell, 753 A.2d at 868.

      Father argues that this Court’s decision in Fitzgerald is controlling.

See Father’s Brief at 13-15.         In Fitzgerald, the appellant, the sole

shareholder of a Subchapter S corporation,3 argued that the trial court erred

by accepting the testimony of the appellee’s expert, who testified that the

appellant’s   net   monthly   income   available   for   support   was   $35,500.

Fitzgerald, 805 A.2d at 531.         The appellee’s expert testified that the

appellant had such a high income available for support because the appellant

could have completely drawn down his business’ line of credit to pay

distributions to himself. Id.




3
   A Subchapter S corporation is “[a] corporation whose income is taxed
through its shareholders rather than through the corporation itself. Only
corporations with a limited number of shareholders can elect S-corporation
tax status under Subchapter S of the Internal Revenue Code.” BLACK’S LAW
DICTIONARY 368 (8th ed. 2004).


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      This Court held that the trial court erred in including the business’ line

of credit in the calculation of the appellant’s income available for support.

Id. at 532. Our Court reasoned:

            Appellant may have been able to increase the
            balance on his credit line in order to shift cash to
            accounts receivable and then distribute these
            “earnings” to himself as income. But[,] what can be
            done by a business on paper and what should be
            done by that same business in reality could be very
            different.

                                 *     *     *

            There is absolutely no evidence in the record that
            appellant was retaining the earnings of his
            corporation in order to avoid paying child support.
            The trial court, therefore, erred by attributing to
            appellant funds which were not available to him as
            income. The business practice discussed by wife’s
            expert does not free up cash within the company
            which could then be distributed to appellant. Rather,
            on a basic level, it appears to this Court that the
            support order will force appellant to pay his child
            support obligations on credit. “It would be untenable
            to argue that proceeds of a loan made to a
            corporation for the exclusive purpose of making
            capital expenditures should instead be disbursed as
            income to the [principal shareholder] of the
            corporation.” Labar v. Labar, [] 731 A.2d 1252,
            1256 ([Pa.] 1999).       The trial court abused its
            discretion by requiring appellant to further leverage
            his company and completely ignoring the fact that
            appellant will have to repay the bank for these
            distribution of “cash.” On remand, the trial court is
            directed to refrain from relying on hypothetical paper
            calculations and determine appellant’s actual
            monthly income based on the reality of appellant’s
            financial situation.

Id.



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      We agree with Father that Fitzgerald is controlling.             Here, like

Fitzgerald, Father is the sole shareholder of MDS, a Subchapter S

corporation. See Weiss Report, 12/15/14, at 4; see also N.T., 1/28/15, at

43. Also like Fitzgerald, there is no evidence that Father was sheltering or

manipulating income to avoid his support obligation. By including the line of

credit for MDS in Father’s income, Weiss’ analysis attributes to Father funds

that were not available for income and forces Father to pay his child support

obligations on credit. See Weiss Report, 12/15/14, at 5, 7. Thus, the trial

court assigned to him as income money that he will have to repay, with

interest, now or in the future. Therefore, fundamentally, it was improper for

the trial court to include the line of credit as income to Father.           See

Fitzgerald, 805 A.2d at 532. Accordingly, we conclude that the trial court

abused its discretion by including the line of credit of $111,000 for MDS as

cash available to Father.

      Mother argues that Fitzgerald is inapplicable to this case because

Weiss converted MDS’ 2013 corporate tax return from an accrual basis to a

cash basis4 and as a result, Father benefitted from the repayment of debt



4
    Weiss explained the differences between cash basis accounting and
accrual basis accounting as follows:

            The primary difference between cash method of
            accounting and accrual method of accounting would
            be, let’s say by way of example, for expenses, if we
            had a utility bill for service that was provided in 2012
            -- I’m using these periods to coincide with the 2013


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that he otherwise would not have received had Weiss used the accrual basis

return.   See Mother’s Brief at 11-14.       This repayment of debt, Mother

argues, lowered Father’s income available for support.      See id.    Mother

asserts that the debt, which exceeded the $111,000 line of credit, effectively

nullified the impact of the line of credit, as MDS could have applied the line

of credit in its entirety towards the repayment of debt.   See id. at 13-14.

Thus, Mother contends the line of credit had no impact on the income Father

derived from MDS. Id. at 14.

      We find Mother’s argument unavailing. There was no requirement that

Weiss convert MDS’ 2013 corporate tax return from an accrual basis to a

cash basis, therefore giving Father the benefit of debt repayment he

otherwise would not have received. Additionally, even if Father had applied

the entirety of the $111,000 line of credit towards repaying MDS’ debt, this

does not account for the fact that at some point, MDS would have to repay

the bank, and therefore, it could not have been income available to Father.

Accordingly, we remand this case to the trial court for the calculation of



            returns -- the service was provided in December of
            2012, but it was paid in January of 2013. On a cash
            basis, expenses can only be deducted in the year
            paid regardless of when that service took place.

            On the accrual basis, the utility bill would have been
            recorded as an expense in 2012 because the service
            was provided in 2012.

N.T., 1/28/15, at 14.


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Father’s support obligation without the inclusion of the $111,000 line of

credit as income available for support.

      Second, Father argues that the trial court abused its discretion in

relying on the Weiss Report in determining his income available for support

because the Weiss Report included the full purchase price of a 2013 Porsche

Cayenne in his income available for support. Father’s Brief at 19-20. Father

contends that his W-2 accounted for the use of the 2013 Porsche Cayenne,

resulting in the vehicle counting twice towards his income available for

support. Id.

      This Court has held that “even if not received by the support obligor as

cash, personal perquisites, such as entertainment and personal automobile

expenses, paid by a party’s business must be included in income for purpose

of calculating support.” Fennell, 753 A.2d at 868 (quotations and citations

omitted).     The certified record reflects that J. Roy’s purchased the 2013

Porsche Cayenne for $72,023. N.T., 1/28/15, at 20-21; see also Plaintiff’s

Exhibit 12.     The certified record further reflects that Father is the sole

proprietor of J. Roy’s and in complete control of how J. Roy’s disburses its

funds. See N.T., 1/28/15, at 42-43; see also Plaintiff’s Exhibit 12. There is

also no dispute that Father is the sole driver of the 2013 Porsche Cayenne.

See N.T., 1/28/15, at 46.     Father has provided no evidence that his W-2

from J. Roy’s accounted for the full purchase price of the vehicle or evidence

to refute any of the aforementioned testimony.      Accordingly, we conclude



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that the trial court did not err including the full purchase price of the 2013

Porsche Cayenne in Father’s income available for support.        See Fennell,

753 A.2d at 868.

      Third, Father argues that the trial court erred in relying on the Weiss

Report in determining his income available for support because the Weiss

Report improperly included $78,251 worth of depreciation for J. Roy’s as

income to Father. See Father’s Brief at 18-20. We conclude that Father has

not preserved his third issue for review. It is well settled that “[i]ssues not

raised before the trial court are not preserved for appeal and may not be

presented for the first time on appeal.”     Rabatin v. Allied Glove Corp.,

24 A.3d 388, 391 (Pa. Super. 2011); Pa.R.A.P. 302(a). Here, Father did not

raise the issue of the Weiss report improperly including $78,251 worth of

depreciation for J. Roy’s at any point before the trial court.    Accordingly,

Father has waived this issue on appeal.5

      For these same reasons, Father has also not preserved his fourth issue

for review, that the trial court abused its discretion by entering the January

28, 2015 order without requiring either party to submit for review the


5
  Even if Father had preserved his third issue for appeal, it would not entitle
him to any relief. The certified record on appeal reflects that the Weiss
Report did not include the $78,251 worth of depreciation for J. Roy’s in the
calculation of income available for support. See Weiss Report, 12/15/14, at
6-7. Likewise, Weiss testified that he did not include any cash from J. Roy’s
as income available to Father for support because there was none and that
he included a financial breakdown of J. Roy’s tax return merely for
informational purposes. See N.T., 1/28/15, at 20-21. Accordingly, this
argument is meritless.


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income and expense statements required under Rule 1910.11(c)(2) of the

Pennsylvania Rules of Civil Procedure. See Father’s Brief at 21-23. Father

made no mention of the parties’ non-compliance with Rule 1910.11(c)(2)

until his concise statement of the errors complained of on appeal pursuant to

Rule 1925(b) of the Pennsylvania Rules of Appellate Procedure. Accordingly,

Father has waived his fourth and final issue on appeal. 6 See Rabatin, 24

A.3d at 391; Pa.R.A.P. 302(a).

      Order affirmed in part and vacated in part.         Case remanded for

proceedings consistent with this memorandum. Jurisdiction relinquished.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/21/2015




6
    We note again that even if Father had preserved his fourth issue for
appeal, it would not entitle him to any relief. While Rule 1910.11(c)(2) did
require the parties in this case to submit income and expense statements,
Father does not cite any rule, case, or statute, that obligates the trial court
to consider the income and expense statements in its support determination.
The record here, including the Weiss Report, the parties’ tax returns, the
parties’ pay stubs, and the tax returns for Father’s businesses provided all
the information the trial court needed to make a support determination
under Rule 1910.16-3.1. See Plaintiff’s Exhibits 1-12; see also Rule
1910.16-3.1. Therefore, Father was not prejudiced by the parties’ failure to
file income and expense statements.


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