J-S37004-18


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    K.H.                                       :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    A.E.H.,                                    :
                                               :
                       Appellant               :   No. 3364 EDA 2017

                 Appeal from the Order Entered October 6, 2017
    In the Court of Common Pleas of Philadelphia County Domestic Relations
                              at No(s): 14-12664,
                             PACSES # 219115003


BEFORE:       OLSON, J., McLAUGHLIN, J., and STEVENS*, P.J.E.

MEMORANDUM BY OLSON, J.:                           FILED SEPTEMBER 11, 2018

        Appellant, A.E.H. (“Father”), appeals from the trial court’s child support

order, which was entered on October 6, 2017. We vacate and remand.1

        Father and K.H. (“Mother”) were married on August 28, 2013 and

separated on September 30, 2014. They have one minor child, A.H. (“Child”),

who was born in August 2014. See Master’s Report, 7/7/17, at 3; K.H. v.

A.H., 170 A.3d 1201 (Pa. Super. 2017) (unpublished memorandum) at 2.

        On November 20, 2014, Mother filed a complaint for child support. The

initial Master held a hearing in 2015 and the Master later filed a report and

proposed order, which imputed an annual earning capacity of $100,000.00 to
____________________________________________


1 As this case involves a dispute over child support payments, we have
identified the parties with initials so as to protect the identity of the minor
child. We have amended the caption accordingly.



*    Former Justice specially assigned to the Superior Court.
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Father and recommended that Father pay $2,317.00 per month in support for

two children.2      Trial Court Opinion, 7/19/16, at 1-2.        Both parties filed

exceptions, which the trial court granted on July 20, 2015, and the matter was

remanded to the current Master.

       The Master held a child support hearing on December 28, 2015 and, on

February 9, 2016, the Master issued a report and proposed order.               The

Master’s Report declared that Father had a net annual income of $75,000.00

and the proposed order recommended that Father pay $1,074.00 per month

in child support. Master’s Report, 2/9/16, at 6-7. Both parties again filed

exceptions to the Master’s Report.

       Although the trial court denied the parties’ exceptions, the trial court

apparently did not accept the Master’s conclusion that Father had a net annual

income of $75,000.00. Instead, the trial court utilized Pennsylvania Rule of

Civil Procedure 1910.16-2(d)(4) and imputed to Father an income equal to an

earning capacity of $75,000.00.          The trial court explained its reasoning as

follows:

           [Mother] would have [Father’s] support obligation be based
           upon the equivalent of his income and lavish spending habits
           during his drug dealing days,[3] which afforded her designer
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2 The second child was not Father’s biological child and it is unclear why she
was included in the Master’s report. See K.H. v. A.H., 170 A.3d 1201 (Pa.
Super. 2017) (unpublished memorandum) at 2 n.2.

3 Father admitted that he sold drugs in the past, but claimed to have stopped
doing so in 2012 after he was acquitted of attempted murder and convicted



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         shoes and clothing, whereas [Father] would have it be based
         upon his reported 2014 earnings from his [legal] businesses,
         plus rental income, or approximately $24,000. In other
         words, the court is requested to either calculate a support
         obligation based upon [Father’s] continued illicit earnings,
         implicitly condoning same, or calculate a support obligation
         based upon [Father’s] reported minimal income, which the
         Master rejected for lack of credibility, particularly since
         [Father’s] recent spending habits exceeded those earnings.

         There was no reported testimony from [Father] denying that
         he paid the expenses cited by [Mother] in 2014 before the
         parties separated, which was after he reportedly ceased his
         illegal activities. Therefore, imputing income based upon
         [Father’s] recent spending history, as described by [Mother],
         would fairly reflect [Father’s] earnings available for child
         support, presumably from his businesses. This would satisfy
         the requirements of Rule 1910.16-2(d)(4), which cites
         earnings history as one of the factors to be considered in
         setting a support obligation.

                                           ...

         In light of the rent/mortgage paid to [Mother’s] sister
         ($1,500), the $1,000 weekly spending money given to
         [Mother], a minimum of $500 per month for food and utilities
         (this court's estimate), $125 per month for insurance and
         $60 per month for [Father’s] phone expense, [Father’s] most
         recent spending habits total approximately $6,500 per month
         or $77,800 per year. Thus, the Master's imputed earning
         capacity for [Father] of $75,000 net annual income, was fairly
         reflective of [Father’s] earnings.

Trial Court Opinion, 7/19/16, at 7-8.

       Father appealed the matter to this Court. We vacated the trial court’s

order and remanded for a “full evidentiary hearing to determine if imputing

an earning capacity is proper and what that earning capacity should be based
____________________________________________


of illegal possession of a firearm. See K.H. v. A.H., 170 A.3d 1201 (Pa.
Super. 2017) (unpublished memorandum) at 2.


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on the factors described in Rule 1910.16-2(d)(4).” K.H. v. A.H., 170 A.3d

1201 (Pa. Super. 2017) (unpublished memorandum) at 10.              This Court

explained:

       We disagree with the trial court[]. . . . The trial court first
       implies that Father is earning money from his “continued illicit
       earnings,” but then states that Mother’s description of
       Father’s spending history “would fairly reflect his earnings
       available for child support, presumably from his businesses.”
       As stated previously, the determination of earning capacity
       should not involve the consideration of what a party could
       theoretically earn, but rather the amount a party could
       realistically earn under the circumstances. As such, the trial
       court should not “presume” where income is coming from;
       rather, it must consider the evidence presented to determine
       the amount of income that Father could realistically earn
       under the circumstances.

       We find further error in the trial court’s conclusion that it
       relied on Rule 1910.16-2(d)(4) to determine Father’s earning
       capacity. Nothing in the record supports that conclusion.

       Pa.R.Civ.P. No. 1910.16–2, pertaining to the calculation of
       income for purposes of determining child support obligations,
       requires the trier of fact to determine “that a party to a
       support action has willfully failed to obtain or maintain
       appropriate employment,” and then “the trier of fact may
       impute to that party an income equal to the party's earning
       capacity.” Pa.R.Civ.P. 1910.16–2(d)(4). The Rule then
       requires that “age, education, training, health, work
       experience, earnings history and child care responsibilities”
       be considered in determining earning capacity for one
       full-time position.     Id.    Further, the Rule states:
       “[d]etermination of what constitutes a reasonable work
       regimen depends upon all relevant circumstances including
       the choice of jobs available within a particular occupation,
       working hours, working conditions and whether a party has
       exerted substantial good faith efforts to find employment.”
       Id.




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        In the instant case, the record is devoid of evidence that
        Father “willfully failed to obtain or maintain appropriate
        employment[.]” Pa.R.Civ.P. No. 1910.16–2(d)(4). Although
        the record does reflect that Father had, at one point, engaged
        in illegal activities to earn an income, that “employment” is
        neither “appropriate” nor in the best interest of the child.
        Father's assertion that he no longer deals drugs does not
        support any conclusion relevant to a consideration of whether
        he “willfully failed to obtain or maintain appropriate
        employment.” Id.

        In addition, even assuming arguendo that Father had willfully
        failed to obtain or maintain appropriate employment, the
        record reflects that the trial court's determination of Father's
        earning capacity was based solely on Father's spending
        history. The trial court had inadequate evidence from which
        to determine what would constitute a “reasonable work
        regimen” for Father, or from which to consider the relevant
        factors, including “age, education, training, health, work
        experience,      earnings      history     and    child    care
        responsibilities[.]” Id.

        Rule 1910.16–2(d)(4) requires a thorough inquiry into the
        relevant factors necessary to establish Father's true earning
        capacity. See Haselrig v. Haselrig, 840 A.2d 338, 341 (Pa.
        Super. 2003) (“the law in Pennsylvania clearly requires the
        trial court conduct a full inquiry before making a factual
        determination of an obligor's true earning capacity”). Here,
        that thorough inquiry did not occur and the record contains
        insufficient evidence from which to impute an earning
        capacity to Father based on appropriate (i.e. legal)
        employment.

        Accordingly, we remand for a full evidentiary hearing to
        determine if imputing an earning capacity is proper and what
        that earning capacity should be based on the factors
        described in Rule 1910.16–2(d)(4).

K.H. v. A.H., 170 A.3d 1201 (Pa. Super. 2017) (unpublished memorandum)

at 7-8 (internal emphasis and some internal citations omitted).




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      Following this Court’s decision, the Master held another hearing on May

18, 2017. The trial court summarized Father’s testimony during the May 18,

2017 hearing:

        At the May 18, 2017 hearing, Father, whose date of birth is
        January 1, 1985, testified that he was a self-employed
        businessman, specifically a real estate investor. While he
        was currently in a one-month course in real estate school, he
        started his own real estate business, On the Rise Productions,
        in 2009. The income generated from this endeavor was
        $7,468.00 for the year 2016, or "about" $622.00 a month.
        He has no other sources of income. Father has not sought
        any other form of employment since 2014.

        While Father had previously engaged in the sale of illegal
        controlled substances, he has maintained that he stopped
        that behavior after he was acquitted of attempted murder in
        2012. He graduated from high school and completed three
        years of college. He has a driver's license. Father lives with
        his mother, step-father, and two siblings in Washington, D.C.
        He has a four-year old daughter living in Maryland for whom
        he pays no child support.

        Father traveled to California in 2017 at the expense of a
        friend. He testified that he stayed there for three days at the
        home of a friend without incurring any expenses. Other
        evidence of Father's access to items of value included a
        picture of him on New Year's Eve in which he wore a Versace
        belt and had paper currency sticking out of his right pocket.
        On March 14, 2017, Father posted on his Facebook page a
        photo of a Louis Vuitton bag, a purse and some perfume with
        the caption, "[t]his is my appreciation to my BM, that raised
        and take care [sic] of my daughter very well. Happy
        birthday." Father testified that the items were actually
        bought by his daughter's mother, "BM," and that the photo
        was deliberately posted on social media for Mother to see.

Trial Court Opinion, 12/19/17, at 2-3 (internal citations omitted).

      On July 7, 2017, the Master issued another report and proposed order.

The report states:

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        The Master finds [Father] has not been diligent in his efforts
        to obtain employment, particularly since [Father] has not
        submitted any applications for employment since 2014.

        Based on the testimony offered and in consideration of the
        [Father’s] age, health, education, employment history and
        child care responsibilities, the Master concludes [Father] has
        a gross annual earning capacity of $50,000.

Master’s Report, 7/7/17, at 9-10. Father filed exceptions, which were heard

and denied by the trial court on October 6, 2017. This timely appeal followed.

      On appeal, Father raises one issue for our review:

        [Whether] the [trial] court erred by denying the support
        exceptions of [Father] and overstating the net income
        attributable to [Father]?

Father’s Brief at 3.

      Father argues the trial court erred by adopting the conclusions of the

support Master and attributing an earning capacity to Father that was not

based on the facts presented to the court. Id. at 14. We agree.

      Our standard of review in support cases is well established:

        We review child support awards for an abuse of discretion. A
        court does not commit an abuse of discretion merely by
        making an error of judgment. Rather, a court abuses its
        discretion if it exercises judgment that is manifestly
        unreasonable or the result of partiality, prejudice, bias, or
        ill-will as shown by the evidence of record. [The Pennsylvania
        Supreme] Court has further observed that [an appellate
        court] will not disturb a support order unless the trial court
        failed to consider properly the requirements of the rules
        governing support actions.

Hanrahan v. Bakker, ___ A.3d ___, 2018 WL 3032674, at *15-16 (Pa. 2018)

(internal citations omitted).


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      Child support “shall be awarded pursuant to statewide guidelines.” 23

Pa.C.S.A. § 4322(a).    “In determining the ability of an obligor to provide

support, the guidelines place primary emphasis on the net incomes and

earning capacities of the parties.” Mackay v. Mackay, 984 A.2d 529, 537

(Pa. Super. 2009) (internal quotations and citations omitted).

      Pennsylvania   Rule   of   Civil   Procedure    1910.16–2    provides   that,

generally, “the amount of support to be awarded is based upon the parties'

monthly net income.” Pa.R.C.P. 1910.16–2. Nevertheless, Rule 1910.16–2

lists certain exceptions to this general rule.       As is relevant to the current

appeal, Rule 1910.16–2(d)(4) declares that, “[i]f the trier of fact determines

that a party to a support action has willfully failed to obtain or maintain

appropriate employment, the trier of fact may impute to that party an income

equal to the party's earning capacity.” Pa.R.C.P. 1910.16–2(d)(4).

      To determine a party's earning capacity, the rule states:

        Age, education, training, health, work experience, earnings
        history and child care responsibilities are factors which shall
        be considered in determining earning capacity. In order for
        an earning capacity to be assessed, the trier of fact must
        state the reasons for the assessment in writing or on the
        record. Generally, the trier of fact should not impute an
        earning capacity that is greater than the amount the party
        would earn from one full-time position. Determination of
        what constitutes a reasonable work regimen depends upon
        all relevant circumstances including the choice of jobs
        available within a particular occupation, working hours,
        working conditions and whether a party has exerted
        substantial good faith efforts to find employment.

Pa.R.C.P.1910.16–2(d)(4).


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      In this case, the trial court concluded that Father’s actual earnings in

2016 were “$7,468 . . . or about $622 a month.”          Trial Court Opinion,

12/19/17, at 2. The trial court then agreed with the Master’s conclusion that

Father “has not been diligent in his efforts to obtain [appropriate]

employment” and, thus, the trial court was required to “impute to [Father] an

income equal to [Father’s] earning capacity.” Id. at 7; see also Pa.R.C.P.

1910.16–2(d)(4).

      However, the trial court and the Master provided no explanation as to

how they calculated Father’s earning capacity to be $50,000.00 per year. To

be sure, both the trial court and the Master simply declared, in conclusory

fashion, that “imputing [] an earning capacity of $50,000 gross per year . . .

is consistent with the evidence presented in light of Father’s age, education,

training, work experience, health, and earning history.” Trial Court Opinion,

12/19/17, at 8; see also Master’s Report, 7/7/17, at 9-10 (“[b]ased on the

testimony offered and in consideration of [Father’s] age, health, education,

employment history and child care responsibilities, the Master concludes

[Father] has a gross annual earning capacity of $50,000”). Neither the trial

court nor the Master described how the relevant statutory factors, either

individually or collectively, impacted Father’s designated earning capacity.

Further, viewing the evidence of record, we conclude that imputing an earning

capacity of $50,000.00 per year to Father is manifestly unreasonable and

constitutes an abuse of discretion.


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      The evidence in this case demonstrates that Father possesses a high

school diploma, completed three years of college (with no degree), and

completed a one-month real estate class. Trial Court Opinion, 12/19/17, at

2; Master’s Report, 7/7/17, at 7-8; K.H. v. A.H., 170 A.3d 1201 (Pa. Super.

2017) (unpublished memorandum) at 2. Father does not have a real estate

license and, other than his personal businesses, his last place of legal

employment was as a lifeguard in 2006, where he made $12.00 per hour.

N.T. Support Hearing, 5/18/17, at 58-59.

      With respect to Father’s businesses, during the December 28, 2015 child

support hearing, Father testified that he owned and operated two businesses:

On the Rise Productions, LLC and Rich and Poor Rental, LLC.          The Master

calculated that Father’s 2013 and 2014 income from On the Rise Productions

was, respectively, $10,158.00 and $6,634.00 and that Father’s 2014 income

from Rich and Poor Rental was $5,760.00.        Master’s Report, 2/9/16, at 5.

During the May 18, 2017 support hearing, Father testified that “he still

operates On the Rise Productions, LLC, but Rich and Poor Rental, LLC ceased

[operations] in 2015, as evidenced by the Articles of [C]ancellation.” Master’s

Report, 7/7/17, at 9; N.T. Support Hearing, 5/18/17, at 53-56. The trial court

found that, in 2016, Father generated $7,468.00 in income from Rich and Poor

Rental. Trial Court Opinion, 12/19/17, at 2 and 7.

      While it is true that the evidence reflects Father is approximately 33

years old, has a driver’s license, has no relevant, stated health conditions, and


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has no childcare responsibilities, there is simply no evidence that indicates

Father’s education or work history would enable him to earn $50,000.00 per

year.4,   5   Therefore, we conclude that the trial court abused its discretion

____________________________________________


4 We note that, in calculating Father’s earning capacity, the trial court again
cited to evidence that Father possesses or owns costly items (such as a Louis
Vuitton bag and a 2007 Infiniti FX automobile), drinks expensive champagne,
and takes costly personal vacations. While this evidence might be very
relevant as to the issue of Father’s actual net income and personal assets,
the evidence is minimally relevant as to the issue of Father’s earning
capacity – and the evidence does not demonstrate that Father is realistically
capable of earning $50,000.00 per year in any legal profession. See K.H. v.
A.H., 170 A.3d 1201 (Pa. Super. 2017) (unpublished memorandum) at 8-10.

5  In Moore v. Moore, this Court held that “[i]t is against public policy to base
a court order of support upon the assumption that the defendant will violate
the law in order to acquire the necessary funds to pay it. . . . A support order
may not be based upon the assumption that continuous unlawful pursuits will
provide the anticipated income.” Moore v. Moore, 181 A.2d 714, 715 (Pa.
Super. 1962). To the extent Moore holds that a court cannot calculate an
individual’s earning capacity based upon illegal pursuits and opportunities,
the rule makes sense: such an order would, in effect, force the obligor to
engage in illegal behavior. However, to the extent Moore holds that a court
cannot recognize illegal funds that the obligor is currently receiving – from
illegal behavior that the obligor is currently pursuing – to calculate an
individual’s net income, the rule seems misguided, unrealistic, and contrary
to both the statutory language and theory behind the child support guidelines.
See 23 Pa.C.S.A. § 4302 (defining the term “income” as including “any form
of payment due to and collectible by an individual regardless of source”)
(emphasis added); Ball v. Minnick, 606 A.2d 1181, 1189 (Pa. Super. 1992)
(declaring that the Child Support Guidelines are based upon the Income
Shares Model and that the “Income Shares Model is predicated on the concept
that the child should receive the same proportion of parental income
that he or she would have received if the parents lived together”)
(emphasis added). Further, as the Court of Special Appeals of Maryland
recognized, a child support order that is based upon a continuous source of
illegal income does not “require that [the obligor] remain in [that] type of
work.” Gallagher v. Gallagher, 703 A.2d 850, 857 (Md. App. 1997). The
order simply recognizes that the obligor has continued to engage in the



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when it imputed to Father an income equal to an earning capacity of

$50,000.00 per year. We must vacate the trial court’s order and remand for

further proceedings.

       Order vacated. Case remanded. Jurisdiction relinquished.

       President Judge Emeritus Stevens joins.

       Judge McLaughlin files a Concurring Memorandum.


Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 9/11/18




____________________________________________


illegality and has continued to receive illegal income. Id. As the Gallagher
Court recognized, “if [the obligor] is able to show at a later point in time that
he no longer engages in [the illegal activity], this may constitute a
circumstance allowing for a modification in the [support] award.” Id.

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