J-A10014-16


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

LORI JOHNSON DUPRE                             IN THE SUPERIOR COURT OF
                                                     PENNSYLVANIA
                            Appellant

                       v.

KENNETH JAMES DUPRE

                                                    No. 740 WDA 2015


                       Appeal from the Order April 9, 2015
               In the Court of Common Pleas of Allegheny County
                    Family Court at No(s): FD 09-008294016


BEFORE: GANTMAN, P.J., BENDER, P.J.E., and PANELLA, J.

MEMORANDUM BY PANELLA, J.                         FILED AUGUST 05, 2016

       Appellant, Lori Johnson Dupre (“Mother”), appeals from the order

entered in the Court of Common Pleas of Allegheny County, which set forth

the amount of child support her ex-husband, Kenneth James Dupre

(“Father”), owed for the parties’ two minor children. Specifically, Mother

argues that the trial court erred in failing to include Father’s proportional

share of the retained earnings1 held in his partnership as income available

for support. For the reasons that follow, we reverse the trial court’s support

order.



____________________________________________


1
  “Retained earnings” refer to a business’s accumulated profits, i.e., the net
sum of the business’s yearly profits and losses. See Rohrer v. Rohrer, 715
A.2d 463, 464 n. 2 (Pa. Super. 1998).
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      Father is the managing partner and owner of 45.5% of Dupre Capital

Partnership (“Dupre Capital”). The other partners are Father’s family

members. The only asset held by Dupre Capital is a Charles Schwab

investment account. For the tax year 2013, Father’s share of Dupre Capital

increased in value by $244,344. Father did not withdraw any funds in 2013

and has not taken any distributions since Dupre Capital was formed.

      The trial court ruled that Father’s undistributed earnings should not be

included in his income calculation because the decision to retain the earnings

had been a “business decision,” and Father proved that retaining the

earnings was “necessary to maintain or preserve … [Dupre Capital].” Trial

Court Opinion, at 6. In support of its conclusion, the trial court relied on

Father’s testimony that Dupre Capital was meant to be a long-term

investment set up so that the partners could withdraw from it upon

retirement. See id. The trial court cited Father’s position that withdrawing

his funds from Dupre Capital would “set a bad precedent” and would

increase the risk for the other partners. Id., at 7. Finally, the trial court

noted that there was no evidence that Father’s decision to retain the

earnings was an effort to shield income from his support obligation. See id.

      Our standard of review for a child support order is well-settled.

      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


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      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.

Kimock v. Jones, 47 A.3d 850, 854 (Pa. Super. 2012) (citations omitted).

      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)    (citation   omitted).    “[I]n   determining   the   financial

responsibilities of the parties to a dissolving marriage, the court looks to the

actual disposable income of the parties.” Id. (citation omitted). “[W]hen

determining income available for child support, the court must consider all

forms of income.” Berry v. Berry, 898 A.2d 1100, 1104 (Pa. Super. 2006)

(citation omitted); see also Pa.R.C.P. 1910.16-2(a). The Domestic Relations

Code defines “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.


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23 Pa.C.S.A. § 4302.

      In regards to business income, this Court has held that “[w]hen 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 and citation omitted). Thus, all benefits flowing

from business ownership must be considered in determining income

available for a support obligation. See Fennell, 753 A.2d at 868. A business

owner “cannot avoid a support obligation by sheltering income that should

be available for support by manipulating … distribution amounts.” Id.

      In Fennell, this Court held that the retained earnings of father, who

was a minority owner of an S-corporation, did not constitute income because

father did not have a controlling interest in the corporation and had no

control over the decision of whether or not he would receive a distribution.

See id., at 869. However, in holding as such, this Court cautioned, “[o]ur

holding herein does not create a presumption that corporate retained

earnings per se are to be excluded from available income for purposes of

support calculations.” Id. Rather, “in situations where the individual with the

support obligation is able to control the retention or disbursement of funds

by the corporation, he or she still will bear the burden of proving that such

actions were necessary to maintain or preserve the business.” Id. (citation

and internal quotations omitted).




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      Although   Fennell    involved    an   S-corporation,   rather   than   a

partnership, we find the legal principles to be guiding in the instant matter.

Here, Father is the managing partner of Dupre Capital and has complete

control over whether he receives a distribution from the partnership. See

N.T., Support Hearing, 9/29/14, at 117. Thus, Father has the burden of

proving that retaining the earnings was “necessary to maintain or preserve”

Dupre Capital. See Fennell, 753 A.2d at 869. After reviewing the record, we

find that Father has failed to prove as such.

      To start, we are unconvinced that it was necessary for Father to retain

his earnings on the basis that withdrawing them would “set a bad precedent”

for the other partners. Moreover, considering the fact that Dupre Capital is a

partnership with an investment portfolio as its only asset, the instant case

stands in stark contrast to one involving an active brick and mortar

business, such as Fennell. Unlike active brick and mortar businesses, which

have fixed overheads and consistent cash flow needs, Father’s investment

account does not have regular cash flow needs. We further reject Father’s

argument that retaining the earnings was necessary because Dupre Capital

was set up to be a long-term investment that partners could withdraw from

after their retirement. Section 4302 of the Domestic Relations Code

specifically provides that “all forms of retirement” are to be included in an

income calculation. Thus, this argument has no merit.

      In sum, we find that Father failed to meet his burden of proving that

retaining his earnings in Dupre Capital was necessary to maintain or

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preserve the business. Based upon our holding in Fennell, we find that

Father failed to show that the $244,344 in retained earnings should not be

included as income. As such, we conclude that the trial court abused its

discretion in this regard. Accordingly, we reverse the order and remand for

proceedings consistent with this decision.

      Order reversed. Case remanded for further proceedings consistent

with this decision. Jurisdiction relinquished.



Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 8/5/2016




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