J-A01012-16


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

M.B.                                              IN THE SUPERIOR COURT OF
                                                        PENNSYLVANIA
                          Appellee

                     v.

K.B.

                          Appellant                    No. 832 EDA 2015


           Appeal from the Order Entered February 13, 2015
            In the Court of Common Pleas of Chester County
  Domestic Relations at No(s): No. 01295N2013 PACSES No. 090108307


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

MEMORANDUM BY STEVENS, P.J.E.:                         FILED APRIL 08, 2016

       Appellant K.B. (“Father”) appeals from the order entered by the trial

court in this child support case.        We vacate and remand for further

proceedings.

       The lower court aptly summarized the history of the case and its

findings and conclusions as follows:

       This is an action by plaintiff [Appellee M.B., hereinafter “Mother”]
       to modify an existing support order entered on September 18,
       2013 with an effective date of September 1, 2013. The original
       order covered two children, [Ma.B.] (d.o.b. 9-23-09) and [Ko.B.]
       (d.o.b. 12/31/04). Another child, [Kh.B] (d.o.b. 3/28/14), was
       conceived and born subsequent to the parties[’] divorce.
       Plaintiff seeks to have [Kh.B.] added to the order as of April 16,
       2014. A further issue is the earning capacity of each party.

       The parties have a 50-50 custody arrangement for [Ma.B.] and
       [Ko.B.]. While [Mother] has had primary custody of [Kh.B]l
       since birth, the parties agreed that she too would be included in
       the 50-50 custody arrangement effective March 15, 2015.


*Former Justice specially assigned to the Superior Court.
J-A01012-16


       When the order of September 18, 2013[,] was entered,
       [Mother’s] monthly net income was “determined” to be $1,500
       and [Father’s] $2,000. I1 use the term “determined” loosely as
       neither party brought wage statements or tax returns to the
       conference to verify their incomes.        They, not the court,
       “determined” what their incomes were. Now that the court has
       to “determine” earnings/earning capacity, it comes as no
       surprise that the parties disagree significantly as to what their
       earnings were or should be.       The fact that both are self-
       employed in occupations where cash is a common method of
       payment complicates my analysis.

       Testimony was taken on December 16, 2014[,] at which time I
       had the opportunity to observe the witnesses, judge their
       demeanor and assess their credibility. Each witness will be
       addressed separately.

       I also have the benefit of the parties[’] briefs.


                                   Mrs. [B.] [Mother]

       [Mother] worked in the day care in the day care industry where
       she earned approximately $30,000/year gross.         Once her
       children were born she was able to bring them to work with her
       at no cost.

       After the parties initially separated, she babysat out of her home
       for several children earning a comfortable sum. However, when
       she became pregnant with [Kh.B.] she had to cut back on the
       number of children she could supervise and, significantly, had to
       stop working for several months after [Kh.B.] was born.
       Obviously, this interruption caused a loss of clientele which is
       understandable. Further, the ability to supervise not only her
       own children, but other children was complicated by having to
       tend to an infant.

       To the argument that she should attempt to return to a day care
       position, she responded that due to the ages of the children she
____________________________________________


1
 All first-person references in the lower court’s opinion are retained for ease
of reading.



                                           -2-
J-A01012-16


     would have to pay for their care which would greatly reduce her
     income.

     [Mother] suggests that her current situation of babysitting at
     home is the most sensible approach, a position I agree with FOR
     THE TIME BEING.

     [Father] argues that [Mother’s] admitted monthly expenses of
     approximately $2,130 supports the conclusion that she must be
     earning $25,000+/year babysitting. [Mother] countered that
     family was assisting her.

     A further complication for [Mother’s] business model is that state
     law regulates the number of children that can be babysat at any
     one time. I realized this may be one of those regulations
     honored more in the breach than by compliance. However, it is
     a limitation on her earnings/earning capacity.

     [Mother’s] 2013 tax return showed receipt of gross income of
     $18,128 from her babysitting business. I did not have the
     benefit of a 2014 return, but I imagine it would not be greater
     than her 2013 income given the birth of [Kh.B.] and the impact
     that had on [Mother’s] ability to babysit other people’s children.

     Accordingly, for 2014, I determine[d] [Mother’s] earning
     capacity to be $18,128. For 2015, I determine[d] her earning
     capacity to be $24,000, as I believed she will be able to rebuild
     her clientele to its former level.

                             Mr. [B.] [Father]

     [Father] is obviously very distressed by the dissolution of the
     marriage and asserts that it has impacted his ability to work. He
     also asserts that his business has suffered from the decision of
     former clients to take work he previously did for them “in house.’

     It has been my experience as a judge and practitioner that
     “competent tradesmen” are always in demand no matter what
     the state of the economy is. While certainly larger clients may
     cut back in tight economic times, there are always a myriad of
     smaller jobs available for one wanting to work. In happier
     times, [Father’s] business did very well. I am certain it did so as
     he was motivated to perform for the benefit of his family. It is


                                    -3-
J-A01012-16


     therefore not surprising that the downturn in his business
     coincides with the dissolution of his marriage.2 Interestingly, as

     2
       Exhibit D-3 shows the decline in earnings that, in my view,
     coincides with the dissolution of the family unit: 2010 - $585,
     142.55; 2011 - $685,609.01; 2012 - $405,099.03; 2013 - $335,
     411.91.


     of the date of the hearing, [Father] did not have available for
     review his 2014 year to date profit and loss statement. In fact,
     he only submitted the 2013 tax return of his company after the
     hearing of December 16th was concluded[, pursuant to court
     order.] I am considering the document as it’s preparer testified
     at the hearing. Initially, I note that there is a positive $12,000
     difference between Exhibit D-3 and the 2013 tax return “gross
     receipts” number. Further, it is my understanding that Mr.
     Dominick, the CPA [and preparer of the return], was given the
     supporting data by [Father] and has just begun functioning as
     his accountant.3 Despite my concerns, I accept the 2013


     3
       A new accountant lacks a sense of the business “long term” as
     he has nothing to compare the data given to him with the
     historical record of the business. Accordingly, the numbers used
     for this return are viewed with some skepticism on my part.


     business tax return as accurate.

     [Father] operates his business from his home which affords him
     a tax benefit yet his [business] return shows a “rent” charge.
     He also purchased a new truck to replace one that was only 13
     months old. His stated reason for doing so is not credible. I am
     hard pressed to accept “automobile and truck expenses” of
     $10,838 for a single vehicle and that it cost $16,374 to fuel. I
     note that [Father] received a $26,093 “loan” from his company.
     There are significant legal fees ($6,015) and a “uniform” cost of
     $100/month. While all these deductions pass the federal tax
     SMELL test, they are warning bells to me that someone is
     intentionally trying to drive down their “income.” I recognize
     that in “happier times” both parties are generally willing
     participants in this type [of] conduct as the savings drop to the


                                   -4-
J-A01012-16


      “joint” bottom line, i.e., real dollars available to spend.
      However, in times of conflict, this type of income adjusting
      quickly becomes unacceptable to one of the parties.

      [Father] has an obligation to maximize his income for the benefit
      of his children even if doing so results in an indirect benefit to
      his former wife. The focus of all, court and parents, needs to be
      on the children, not indirect beneficiaries. When I add back
      “suspect deductions”4 I find [Father’s] 2013 income to be just
      over $100,000.00, a sum consistent with what a competent
      tradesman of his experience would earn. Accordingly, I find his
      earning capacity to be $104,000.00/year for 2013 and going
      forward.


      4
         To me, a “suspect deduction” is one that while allowed for
      federal tax purposes permits a person to shift what would
      otherwise be taxable outlays or income to tax deductible ones or
      to have the use of funds (a loan) versus ownership of the funds
      (income).




                                 The Accountants

      Ms. Evans testified for [Mother] and Mr. Dominick testified for
      [Father]. Neither contributed anything of significance to my
      analysis.

      ****

Lower Court Opinion, filed February 13, 2015, at 1-5.

      The lower court entered an order directing child support payments

consistent   with   its   determination   of   the   parties’   respective   earning

capacities. Father filed this timely appeal, in which he raises the following

issues for our review:

      1. Whether the lower court abused its discretion when it ignored
         and misapplied law by placing the entire burden of supporting
         the children on Father, held Father to an artificially high

                                      -5-
J-A01012-16


         income, considered matters not of record and did not
         accurately calculate Mother’s income available for support.

      2. Whether the lower court abused its discretion by exercising
         judgment that is shown by the record to be manifestly
         unreasonable as well as the product of partiality, prejudice
         and bias toward Father and by making assumptions that were
         gender based.

      3. Whether the lower court’s decision must be reversed because
         there is insufficient evidence on the record to sustain the
         support order that holds Father to an artificially high and
         unsubstantiated $104,000.00 gross income per year and
         Mother to an unreasonably low $18,000.00 gross income per
         year where the record indicated that Mother’s true income
         and her earning capacity were in excess of $30,000.00 gross
         per year.

Appellant’s brief at 5.

      Our standard of review over child support orders is:

      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.

Kimock v. Jones, 47 A.3d 850, 853-54 (Pa.Super. 2012).

      Essentially,   Father’s   issues    coalesce   to   challenge   the   court’s

calculations of the parties’ respective earning capacities.       To the extent

Father charges error in the calculation of Mother’s earning capacity, our

careful review leads us to disagree, as the court’s determination in this


                                         -6-
J-A01012-16



regard finds ample support in the record.       In this respect, we adopt the

attached lower court opinions and their expression of rationale as to

Mother’s earning capacity.

      As for Father’s earning capacity, however, we determine that the court

erroneously based its calculations on important evidence not introduced into

evidence.   It is well-settled that a trial court may not consider evidence

outside of the record in making its determination.      Ney v. Ney, 917 A.2d

863, 866-67 (Pa.Super. 2007) (citing Eck v. Eck, 475 A.2d 825, 827

(Pa.Super. 1984)). “Nor may this court uphold a trial court's order on the

basis of off-the-record facts.”   Eck, at 27 (citing In re Frank, 423 A.2d

1229 (Pa.Super. 1980)).

      In Ney, this Court reversed a support order and remanded for a

redetermination of the father’s earning capacity where it was evident that

the trial court had based its earning capacity calculations in large part on its

own internet search of job opportunities in the father’s field of work, even

though such results were unsubstantiated by evidence of record:

      It is apparent that the trial court found that [the father] willfully
      failed to seek appropriate employment based upon its own
      internet job search. There is no other evidence of record that
      there were suitable positions available, and that [the father]
      failed to apply for these positions. Thus, we conclude that the
      trial court abused its discretion when it considered and relied on
      this evidence.

      On this basis, we reverse the Orders of the trial court, and
      remand for a determination of [the father’s] earning capacity
      based only upon the evidence of record. In light of our holding,
      we need not address [the father’s] remaining claim of error.


                                      -7-
J-A01012-16



Id. at 868. Compare Commonwealth v. Bogosian, 12 A.3d 448, 460-61

(Pa.Super. 2011) (distinguishing Ney where trial court, deprived of precise

valuation records in father’s control, nevertheless relied on evidence of

record   in   applying   unconventional       method   of   calculating   equitable

distribution as equities in case required).

      Upon our review of the record, we conclude that the lower court,

notwithstanding its thoughtful, perceptive, and concerted efforts to promote

the equities of the case, improperly considered evidence outside of the

record in determining Father’s earning capacity. Pivotal to the lower court’s

calculation was its consideration of the 2013 federal tax return of Father’s

business, which the court ordered Father to supply only after the hearing’s

conclusion. Indeed, the court indicated the business return was necessary

to a meaningful analysis of Father’s earning capacity:

      THE COURT:        Well, to get a real fix on everything here, I
      need [Father’s] 2013 business tax return. So by next Monday,
      counsel, I want you to provide me with a copy of that 2013
      business return and provide the other side with it. Just for
      information purposes, I will look at it myself, because while
      there are plenty of things that get deducted, they don’t
      necessarily get deducted for support purposes, and we will have
      an opinion for you promptly thereafter. Have a nice day.

N.T. at 78-79.

      In its written opinion, the court attempts to justify its use of the critical

tax return de hors the record on the fact that the accountant who prepared

the return testified at the hearing. The accountant, however, provided no

testimony regarding key aspects of the business return that factored heavily


                                      -8-
J-A01012-16



into the court’s decision,2 nor did any other evidence admitted at the hearing

relate to such information.         For example, the business return’s listing of

deductions such as significant legal fees and truck and fuel expenses, which

the court viewed with incredulity and, ultimately, rejected in its post-hearing

opinion and order, were never addressed at the hearing; indeed, Father had

no opportunity to explain these amounts to the court.          The court likewise

refers to various discrepancies between Father’s personal and business tax

returns with respect to gross sales and wages he drew from his S

corporation, “two glaring errors [which] certainly called into question the

accuracy of the information [Father] was providing to me.”          Lower Court

Opinion, filed May 29, 2015, at 2-3. Again, the court acknowledges that it

relied on evidence not of record to reject evidence of earning capacity that

Father presented at trial.

       Therefore, while the business return proved essential to a meaningful

assessment of Father’s income and earning capacity for child support

purposes, and we agree with the lower court’s demand for such information,

we conclude it was nevertheless necessary for the court to receive the return

as evidence in open court where the parties could examine it, testify to it,

and thereby place it in context for the benefit of the court’s analysis.      To



____________________________________________


2
  Indeed, the court indicates in its written opinion and order that neither
accountant contributed anything significant to its analysis.



                                           -9-
J-A01012-16



have rendered an ultimate decision on earning capacity on the basis of

information obtained off the record was error.

      Also without support in the record were the court’s assumptions as to

Father’s ability to recoup all income lost from the discontinuation of large

contracts by simply accepting a “myriad” of smaller jobs in their stead.

Again, there was insufficient evidence adduced at trial to support this

conclusion, which the court appeared to base on nothing other than its own

experience and personal belief that there is always work available for good

tradespeople.    While both accountants testified to improving economic

conditions in the local construction industry, such testimony fell well short of

amounting to an earning capacity opinion that Father had the ability to offset

all revenue losses from discontinued large contracts but had simply chosen

not to act on such ability.

      Our decisional law requiring child support orders based on on-the-

record facts constrains us, therefore, to vacate the lower court’s order and

remand for further proceedings, where the court shall accept the 2013

business tax return in open court and invite testimony on it as well as on

any other matter it deems pertinent to its task of ascertaining Father’s

earning capacity.

      Order vacated.    Case remanded for proceedings consistent with this

decision. Jurisdiction relinquished.




                                       - 10 -
J-A01012-16


Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 4/8/2016




                          - 11 -
                                                                                                       Circulated 03/22/2016 01:47 PM




MEGHAN BARLOW,                                           :IN THE COURT OF COMMON PLE~S
         Plaintiff                                       :CHESTER COUNTY, PENNSYLV ANTA

          vs                                             :PACSES CASE NO. 090108307                                               /

KEVIN BARLOW,                                            :DOCKET NO. 01295N2013
          Defendant                                                                                                     ,_,
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                                                     OPINION


           This is an action by plaintiff to modify an existing support order entered on

September 18, 2013 with an effective date of September 1, 2013. The original order covered

two children, Madison (d.o.b. 9-23-09) and Konnor (d.o.b.                   12/31/04).                 Another child, Khloe

(d.o.b. 3/28/14), was conceived and born subsequent to the parties divorce. Plaintiff seeks to

have Khloe added to the order as of April 16, 2014.1                A further issue is the earning capacity

of each party.

           The parties have a 50-50 custody arrangement for Madison and Konnor. While wife

 has had primary custody of Khloe since birth, the parties agreed that she too would be

 included in the 50-50 custody arrangement effective March 15, 2015.

            When the order of September 18, 2013 was entered, wife's monthly net income was

 "determined" to be $1,500 and husband's $2,000. I use the term "determined" loosely as

 neither party brought wage statements or tax returns to the conference to verify their

 I   Defendant questioned paternity which was st:ientifically   established as of August 15, 2014.
incomes. They, not the court, "determined" what their incomes were. Now that the court has

to "determine" earnings/earning capacity, it comes as no surprise that the parties disagree

significantly as to what their earnings were or should be. The fact that both are self

employed in occupations where cash is a common method of payment complicates my

analysis.



        Testimony was taken on December 16, 2014 at which time I had the opportunity to

observe the witnesses.judge their demeanor and assess their credibility. Each witness will

be addressed separately.

        I also have the benefit of the parties briefs.



                                           Mrs. Barlow



        In happier times, Mrs. Barlow worked in the day care industry where she earned

approximately $30,000/year gross. Once her children were born she was able to bring them

to work with her at no cost.

        After the parties initially separated, she babysat out of her home for several children

earning a comfortable sum. However, when she became pregnant with Khloe she had to cut

back on the number of children she could supervise and, significantly, had    to stop   working

for several months after Khloe was born, Obviously, this interruption caused a loss of

clientele which is understandable. Further, the ability to supervise not only her own children,

but other children was complicated by having to tend to an infant.
       To the argument that she should attempt to return to a day care position, she

responded that due to the ages of the children she would have to pay for their care which

would greatly reduce her income.

       Wife suggests that her current situation of babysitting at home is the most sensible

approach, a position I agree with FOR THE TIME BEING.

       Husband argues that wife's admitted monthly expenses of approximately $2,130

supports the conclusion that she must be earning $25,000 +/year babysitting. Wife countered

that family was assisting her.

       A further complication for wife's business model is that state law regulates the

number of children that can be babysat at any one time. I realize this may be one of those

regulations honored more in the breach than by compliance. However, it is a limitation on

her earnings/earning capacity.

       Wife's 2013 tax return showed receipt of gross income of $18,128     from her

babysitting business. I do not have the benefit of a 2014 return, but imagine it would not be

greater than her 2013 income given the birth of Khloe and the impact that had on wife's

ability to babysit other people's children.

        Accordingly, for 2014 I determine wife's earning capacity to be $18,128.   For 2015,    I

determine her earning capacity to be $24,000 as I believe she will be able to rebuild her

clientele to its former level.
                                                    Mr. Barlow



           Mr. Barlow is obviously very distressed by the dissolution of the marriage and

asserts that it has impacted his ability to work. He also asserts that his business has suffered

from the decision of former clients to take work he previously did for them "in house'>.

           It has been my experience as a judge and practitioner, that "competent tradesmen"

are always in demand no matter what the state of the economy is. While certainly larger

clients may cut back in tight economic times, there are always a myriad of smaller jobs

available for one wanting to work. In happier times, Mr. Barlow's business did very well. J

am certain it did so as he was motivated to perform for the benefit of his family. It is

therefore not surprising that the downturn in his business coincides with the dissolution of

his marriage.2 Interestingly, as of the date of the hearing, defendant did not have available

for review his 2014 year to date profit and loss statement. In fact, he only submitted the

2013 tax return of his company after the hearing of December 16111 was concluded. I am

considering the document as it's preparer testified at the hearing. Initially, I note that there is

a positive $12,000.00 difference between Exhibit D-3 and the 2013 tax return "gross

receipts" number. Further, it is my understanding that Mr. Domenick, the CPA, was given

the supporting data by Defendant and has just begun functioning as his accountant.' Despite

my concerns, 1 accept the 2013 business tax return as accurate.

           Defendant operates his business from his home which affords him a tax benefit yet

his return shows a "rent" charge. He also purchased a new truck to replace one that was only

1
    Exhibit D-3 shows the decline in earnings that, in my view, coincides with the dissolution of the family unit:
2010 - $585, 142.55; 2011 - $685,609.01;     2012 - $405,099.03; 2013 - $335,4 I 1.91
3
 A new accountant lacks a sense of the business "long term" as he has nothing to compare the data given to
him with the historical record of the business. Accordingly, the numbers used for this return are viewed with
some skepticism on my part.
    13 months old. His stated reason for doing so is not credible. I am hard pressed to accept

"automobile and truck expenses" of$10,838 for a single vehicle and that it cost $16,374 to

fuel. I note that Mr. Barlow received a $26,093 "loan" from his company. There are

significant legal fees ($6,015) and a "uniform" cost of $100/month. While all these

deductions pass the federal tax SMELL test, they are warning bells to me that someone is

intentionally trying to drive down their "income". I recognize that in "happier times" both

parties are generally willing participants in this type conduct as the savings drop to the

"joint" bottom line, i.e., real dollars available to spend. However, in times of conflict, this

type of income adjusting quickly becomes unacceptable to one of the parties.

           Mr. Barlow has an obligation to maximize his income for the benefit of his children

even if doing so results in an indirect benefit to his former wife. The focus of all, court and

parents, needs to be on the children, not indirct beneficiaries. When I add back "suspect

deductions'" I find Mr. Barlow's 2013 income to be just over $100,000.00, a sum consistent

with what a competent tradesman of his experience would earn. Accordingly, I find his

earning capacity to be $104,000.00/year for 2013 and going forward.



                                             The Accountants



           Ms. Evans testified for Plaintiff and Mr. Domenick testified for Defendant. Neither

contributed anything of significance to my analaysis.




4
 To me, a "suspect deduction" is one that while allowed for federal tax purposes permits n person to shift what
would otherwise be taxable outlays or income to tax deductible ones or to have the use of funds (a loan) versus
ownership of the funds (income).
                                          It is in the parties mutual best interest to maximize the income available by

         allocating tax deductions between themselves in the most beneficial manner. Accordingly,

         my calculations were done with Defendant claiming all three children on his return.

                                          Based on the foregoing I enter my

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                                                                             - y-_£_
                                                                          / .3 ·     day of February, 2015, the Order of September 18,
       ~~'                  ~:,', AND NOW, this
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         ~13 f·iMODIFIED as follows:

                           1. Effective Aprl 16, 2014, Khloe Barlow is included for purposes of support and

                                           Defendant shall pay the following sums for the support of 3 children:

                                           a) For the period April 16 to December 31, 2014, the sum of

                                                           $1,664.44/month5   plus $90.00/month on arrears, and

                          2. Effective January 1, 2015 thru March 14, 2015, the sum of $1,63 l. l 5/month6 plus

                                            $90.00/month on arrears, and

                          3.                Effective March 15, 2015 forward the sum of$1,223.77/month7                plus $90.00/month

                                            on arrears, and




           5 Plaintiff at $18, 128, Defendant at$ I 04,000 with Defendant claiming the 3 children and Plaintiff having
           Khloe full time with shared custody of the other children.
           6 Plaintiff at $24,000 Defendant at $104,000 with Defendant claiming the 3 children and Plaintiff having Khloe

           full time with shared custody of the other children.
           7 Plaintiff at $24,000, Defendant at $104,000 and shared custody of all children
   4. Unreimbursed medical expenses are to be allocated 84% to Defendant and 16% to

       Plaintiff for the period up to January 1, 2015. Thereafter, said expenses are to be

       allocated 80% to Defendant and 20% to Plaintiff.

In all other respects, the order of September 18, 2013 is AFFIRMED.




                                      BY THE COURT:




                                      Thomas G. Gavin                        S.J.




                                                                                              i
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                                                                                              I
APPENDIXB
                    MEGHAN BARLOW,                       IN THE COURT OF COMMON PLEAS
                        Plaintiff
                                                         CHESTER COUNTY, PENNSYLVANIA

                            vs.                          NO. 1295N-2013 /

                     KEVIN BARLOW,
                        Defendant                                                          r:~
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          Alice Buggy Miller, Esquire, on behalf of the Plaintiff            . : .~ : ;:.~ ~~~
          Barbara Schneider, Esquire, on behalf of the Defendant             :         ··, .
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                                                 OPINJON                                           -·,
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                 Defendant's concise statement of matters complained of raises

          twenty-three (23) separate grounds for relief, one of which contains four

  I sub-paragraphs. Additionally, Defendant in his penultimate                                        claim of error,

 · #24, seeks leave to (file),

                 "Other errors that may become apparent upon review of the record
                 once it is complete".

          Clearly Defendant is dissatisfied with my opinion. However, his shotgun

          approach is the very antithesis of what the statement envisions especially

          when he repeats the same theme in different forms.

                 Where possible, I have grouped together what I consider to be

          related issues for discussion:

                                           #1, #5, #6 and #15

                 I based Defendant's 2014 income on his 2013 tax return which

\i counsel asserts was not part of the record.
II
      i
,I
III
- -- -,.'-;- ----



                            The hearing in this matter was held on December 16, 2014.

                   Interestingly, Defendant did not have available his year to date 2014 profit

                   and loss statements which l assume business people prepare on a monthly

                   basis.    He did present his 2013 personal tax return, see Exh. D-2. l note

                   that in domestic relations cases it seems to be a common practice for one

                   or both of the parties not to have available the very information that the

                   court needs to render a decision.       This is especially true in cases where

                   one or both of the parties are self-employed.        Defendant's 2013 personal

                   tax return is meaningless without access to his business return which was

                   the source of the income listed on the personal return.         As his income was

                   very much at issue, I anticipated that he would have the relevant

                   information at hand.     While his 2013 business return existed,     it was not

                   produced prompting me to direct defense counsel:

                            "      to provide me with a copy of that 2013 business return and
                            provide the other side with it. Just for information purposes, I will look
                            at it myself ..... " NT 12-16-14, pg. 78 L25-pg 79 L3.

                   Obviously, defense counsel knew I was going_ to consider it in reaching my

                   decision, and I did.    I attach it as an exhibit to this opinion.

                            Defendant submitted Exh. D-3 which listed his sales for the years

                   2010 thru. 2013.     I note that D-3 shows gross sales of $335,41 :1.00 for 2013

                   whereas the 2013 corporate tax returns shows sales of $347,080.00.


                  r-                                          2

             .,
             I:
      Deducting the cost of goods sold, Defendant's company had net (before

      expenses)iricome         of $191,713.00.      Defendant's 2013 persona-I tax return

      showed wages of-$38,289.00             whereas the 2013 corporate tax return

      showed "compensation             of officers" as $49,337.00.   These two glaring-

          errors certainly called into question the accuracy of the information

          Defendant was providing to me. Defendant operates his business out of

          his home and I therefore disallowed the rent deduction of $6,657. 00.               I

          added back 50% of his vehicle and gas expense, to wit $13,606.00.               I

          added back 50% of his internet, legal and professional fees - $3,757.00

          and 100% of his uniform charge, $1,230.00.           I disallowed depreciation of

          $~4,431.00 claimed on his trucks.

                Form 8824 of the 2013 corporate tax return shows that he traded in a

          truck acquired on September 11, 2012 for another truck on October 15,

          2013. His stated reason for doing so was that,

                "The truck had a transmission problem that the dealership would not
                warrantee. So as I was driving down the road, the truck would
                continuously buck and lose speed. That's the worst thing for any
                construction company to call your customer and say your truck is
                broke down."

                NT 12-16~14,    pg. 76, L 17-23

     I
          I did not credit that testimony as I find it hard to believe that the

     11   transmission in a 2012 truck would be out of warranty in a year. Further, I
11                                 .                       .

I'                                                    3

I
        find it difficult to accept that a person whose business was supposedly

        declining would incur an additional.$30,000 expense to buy another truck

        from the .same company that would not warrant the current one! Thus, I

        added back $14,431.00.               His accountant indicated he contributed

        $17,500.00 to his retirement plans. While it is certainly prudent for him to

    . be forward lookinq in setting money aside for his retirement, that must be ·

        subordinate to the current needs of his children. \Nhen I total these sums I

        get actual earnings greater than the $104,000.00 earning capacity I

        ascribed to him. Accordingly, no error was committed.

              Defendant asserts error due to his inability to contest the

        reasonableness of the business deductions I added back. Again, had

        Defendant timely produced his 2013 business return this would not be an

        issue. When I directed that the return be provided. counsel could have

        requested that the record be kept open to address the return.             Having failed

        to do so, the issue is waived.

                                         #2, #3, #11, #12 and #19

              All these issues revolve around my determination of Plaintiff's

        "earning capacity".       Early in the parties' marriage, Plaintiff worked as the

        director of a child day care center where she earned $30-,000.00/year1.

I   l
'---------
              See NT 12-16-14, pg. 12, L24

                                                        4
Then, she had one child who was permitted to attend the day care center

    at no cost. Id. @ L 22.

             Once the parties divorced (2012), she began a home-based

    babysitting business. During this time there appears to have ·been a

    reconciliation and she became pregnant with their child, Khloe, who was

    born on March 28, 2014. Unfortunately, the reconciliation failed and the

    parties now live separately. However, Plaintiff's .abllityto work is presently

    limited by the fact that she has an eight month old to care for as well as

    three other children, two of whom are under the age of ten.

              Plaintiff's current ability to· grow her babysitting business is further

        limited due to State- regulations
                               .
                                          as to the number. and. ages of children she

        can babysit. In addition to her own infant, Khloe, she currently babysits

        another infant, Aden, who is younger than Khloe. She must also watch her

        own children when they are not in school. Her children are counted by the

        State regulations in the total number of children she can watch which is a

        further limitation on her earning capacity.

             . Plai_ntiff testified that if she returned to a day care setting she would

        have to pay for her children to attend day care and therefore such a




    I
I
                                                 5
11


I
     position did not make economic sense.2 I agreed and determined that her

     plan of working out of her home made sense as:

          1) She is caring for their infant, Khloe, and

          2) She has all her children3 50% of the time, and

          3) She watches all the children after school etc. during the 50% time

              period Defendant has them, and

          4) She has been attempting to re-establish her babysitting business      l
                                                                                   l
              which suffered an understandable downturn due to the birth of
                                                                                   li
              Khloe in March of 2014, and                                          1
                                                                                       I
          5) She earned ·$18,000.00 in 2013 when she did not have an infant of         I
                                                                                       I
              her own to care for, and                                                 I
                                                                                       I
          6) It is expected that she would be out of the workforce post-delivery        j
                                                                                        !
               of Khloe and suffer a decrease in earnings in 2014, and
                                                                                        !!
          7) It is expected that it will take time to maximize the number of

               children that she supervises, and,                                       I
          8) The current arrangement is best suited to the circumstances                   I
                                                                                           l
               presently confronting her.                                                  II
                                                                                            1
      Had Plaintiff not given birth to Khloe, I would have anticipated her 2014              I

                                                                                             I
                                                                                             I
      income to be greater than her 201·3 income as her business would                       I
                                                                                             !!

           See NT 12-16-15, pg. i2, L 8-14
I )        Beginning March 15, 2015

,1                                           6

11
II
      presumably have grown. It is certainly reasonable for a new mother to be

      out of the workforce for several months post-delivery and I therefore kept

      her 2014 income at the same level as 2013. For 2015, I 'believed

      $24,000.00 to be a reasonable income based on her past earnings and

     that Khloe would no longer be an infant allowing Plaintiff more flexibility as

     to the mix of children she can supervise. This is the very analysis called

     for by Pa.RCP, Rule 1910.16-2(d}(4).        Plaintiff is essentially a high school

     graduate with on the job training in daycare whose greatest income was

      earned when she had one child. Now, she has four and significant

      childcare responsibility for HER OWN children.       Frankly, I think she Is

     doing the best she can and the income I ascribed to her reflects that fact.

                                     #4, 8, 14, & 18

           Defendant asserts that I considered facts not of record in assessing

     his income. In my capacity as judge, I routinely come in contact with

     "trades people", most often in criminal cases. As they have fines and costs

     to pay, I inquire as to their income and job availability as it aids me in

     setting a payment schedule. I see "trades people" who-are employees and

     those who own their own business. I see every skill level from unskilled to

     highly skilled. The qreater the skill, the higher t0e pay. I have been asking

     these questions for 30 years, a period that includes boom and bust years


                                             7
..
L
 for the trades.     Fortunately, Chester County is blessed with well-educated

  citizens who are usually the last to be impacted by a downturn in the

  economy, is home to major businesses and has fared much better

  economically than other parts of the state and country. All of this is a

  matter of public knowledge which I did consider in assessing defendant's

  comments as to his business and earnings.        I did and do think it suspect

  that the decline in defendant's business coincided with the dissolution of his

     marriage. .He would not be the first husband to cut back on his work efforts

     because of marital discord.   Just because he said his business has

     suffered, does not mean I have to believe· him. I did not as his testimony

     was inconsistent with what is.comrnonly known.

           As to his 2014 business records, I did draw a negative inference from

      his failure to produce them. A person whose business was supposedly on

      the decline would be expected to produce records documenting      same.

                                        #13 & 17

            Defendant asserts that I placed the sole burden of supporting the

      parties' children on him contrary to law.

            I did no such thing. I gave the work-at-home mother of an infant and

      two children under age ten an earning capacity of $18,000.00 to
'1               .
II
  I
  I
                                          .   8

II,
$24,000.00.     She is certai.nly doing her part to meet the financial needs of

the children consistent with her other obligations to them.

      Defense counsel is free to characterize· my comment that defendant

should not. be setting aside funds for his future needs when the children

have current needs as, "maximizing his income for the benefit of his

children".    I did NOT suggest that only defendant do so. Plaintiff did not

set aside dollars for her future needs as she had no such dollars available

to her.   Rather she was spending everything she earned for the children's

current needs and benefit.



       ram unable to address this issue as it grossly misstates plaintiffs
I prior income and also asserts, CONTRARY TO THE POSITION
OTHERWISE TAKEN, that Defendant's income "had been increasing from

prior years".

                                              #10

              Defendant asserts that I should have considered financial

assistance provided to plaintiff by family and/or third parties. Such funds

are not "income" for support purposes. See 23 Pa. CSA §4302.

                                     #7 & 16




                                          9
           As to business expenses, I   am not required to follow   federal tax

     deductibility standards. I have no doubt that defendant operated his

     business out of his home. However, he would have borne the expenses of

     that part of his home jf he did not operate his business from it. Vehicle

     expenses are both business and personal and I did not allow the write off

     the federal tax authorities allow. The same is true for the "uniform"

     expense.

           Defendant determines whether money taken from the business is a

     loan, salary etc. How the money is labeled affects its deductibility to the

     business and potential taxability to a third party. Loans are not income.

     I However, loans put money in the recipient's pocket making it .available to
     spend as he chooses. Here the fact that defendant was both recipient and

     lender prompted me to disregard his self-serving characterization of the

     transaction and to view it as income.

           Defendant's corporate tax return for 2013 includes form 8824, "Like-

     Kind Exchanqes". The "new" truck cost $42,2~5.00 and the "old" truck was

     valued at $11,624.00.   This transaction sounds like a "purchase" to me.




II                                           10


It
II




                                                #20

                Footnotes 5, 6 & 7 show the facts upon which my support

          calculations-were based. My opinion shows how I arrived at the various




          enable Defendant to verify the calculations 1 ran as everyone uses the

          same tax software system.

                                                #21

                Obviously I disagree that my findings evidence bias. I believe they

          are supported by the record.



                Plaintiff produced her tax return which I considered together with all

          the evidence in setting her "earning capacity". I credited plaintiff's

          I statements a~ to her earnings but determined she had a greater "earning
          capacity" and used it in my calculations.

                I do not understand the complaint as to Plaintiff's expenses being

          accurate. She was asked to state them and did so. They were not

          challenged on cross. Regardless, they were a non-factor in my decision.




                                                  11


     I,
              I have already addressed Plaintiffs earning capacity.

             To the suggestion that Plaintiff should be able to work" when

     · defendant has the children, .I accepted her explanation as to why that was

     not possible.        She testified,
                                                                                                                         I
                                                                                                                         I


             Q.       So what arrangements have you made to have children during
                      the time that Mr. Barlow has the children 50 percent of the
                      time?

             A.       Mr. Barlow does not have them during the day when I work.
                      They're with me. In the summer when they're off from school                                        I
                      and during the week, Madison is with me. It always has been                                        l
                      that. That has not changed thus far.
                                                                                                                         II
                      NT 12-16-14, pg.11,L23--pg.12,                        L5
                                                                                                                          I
                                                                AND

                                                                                                                         I
             THE COURT:                  Now, in the period where your former husband has                                l!
                                         the two children during the day, assuming he is at                              !
                                                                                                                             '
                                       · work, who watches the children during the day?                                      !
                                                                                                                             !
                                                                                                                             !
             THE WITNESS: I do.                                                                                              I
                                                                                                                             i
             THE COURT:                  So even though he has them 50 percent of .the time,                                 !
                                         I'm not commenting negatively on it, physically, a                                  I
                                         portion of that, 50 percent of the time, the children                               !
                                         are with you because he is working?                   l
                                                                                                                             I
                                                                                                                             i
                                                                                                                             I
1 -----'---
     4
   I assume defense counsel means that she should be able to work more hours or at different employment
                                                                                                                             I
                                                                                                                             I

     when Defendant has the children. In light of her testimony, I find this suggestion unworkable, no pun intended.
                                                                                                                             I
                                                              12                                                       - I
u                                                                                                                        Ii
11                                                                                                                           I
II




          THE WITNESS: Yes but nighttime is-how they delegate the custody_;
                                1


                       yes.

          NT 12-16-14, pg. 19, L8-19




     I respectfully submit that Defendant's appeal be denied.


                                               BY THE COURT:




                                               T · ornas G. Gavin, S.J.




                                          13
