Amato, J. v. Amato, K. ( 2022 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
JASON AMATO : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
KRISTEN AMATO : No. 1424 EDA 2021
Appeal from the Order Entered June 10, 2021
In the Court of Common Pleas of Montgomery County Domestic Relations
at No(s): 2020-13808
BEFORE: BOWES, J., STABILE, J., and McLAUGHLIN, J.
MEMORANDUM BY McLAUGHLIN, J.: FILED AUGUST 3, 2022
Jason Amato (“Father”) appeals the order awarding child support to
Kristen Amato (“Mother”).1 He claims the court erred in denying his
exceptions, which challenged the calculation of his income. We affirm.
The trial court set forth the factual and procedural history of this case,
which we incorporate herein. Trial Court Opinion, filed Dec. 28, 2021
(“1925(a) Op.”), at 1-8. We will provide a brief summary.
Father and Mother were married in April 2017 and separated in August
2020. In September 2020, Mother filed a Complaint for Support, seeking child
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1 Father appealed both the child support order and the alimony pendente lite
(“APL”) order. This Court issued a Rule to Show Cause, as APL generally is not
appealable until resolution of all economic claims in a divorce action. Father
filed a response, acknowledging the APL portion of the order was interlocutory
and only the child support order was appealable. Accordingly, this Court
entered an order stating that “only the portion of the order with regard to child
support will be referred to the panel assigned to decide the merits of this
appeal.” Order, filed Sept. 3, 2021 (emphasis in original).
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support and APL. After a hearing, the Support Hearing Officer set Mother’s net
monthly income at $3,866.27 and set the net monthly income for Father, who
owns a business, at $7,911.23. The Hearing Officer based Father’s income on
his 2020 payroll detail report, his bank account statements, his testimony,
and “add-backs” from the 2019 tax return for Father’s business. During the
hearing, the Hearing Officer heard Father’s testimony that he funneled certain
personal expenses through his business. The Hearing Officer thus included as
gross income for Father the following: (1) $28,262 based on his 2020 payroll;
(2) $36,650 based on 2020 distributions; (3) $29,330 based on depreciations
from his 2019 Tax Return; and (4) $5,450 based on half of his auto expenses
from his 2019 Tax Return. The hearing officer denied a reverse mortgage
deviation. She further found that, effective December 1, 2020, childcare
expenses consisted of $145 per week. The Hearing Officer directed Father to
pay child support in the amount of $945.01 per month, plus costs for medical
insurance provided by Mother, costs for childcare, and APL.
Father filed exceptions to the report, which the trial court denied. In
denying the exceptions, the trial court made the following conclusions:
1. It was not an error to deny the mortgage deviation
adjustment as the deviation is not mandatory, the marital
residence was a pre-marital property, titled in Father’s
name only (such that Mother would only be able to claim a
percentage of the increase in value of the property during
the marriage), and Father was effectively maintaining his
own marital asset by contributing to the mortgage expense;
2. It was not an error to include the $145 weekly child care
expense as both parties were held to full time earnings and
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the cost of $145 a week, effective December 1, 2020, had a
fairly de minimis impact on the overall support award;
3. With respect to Father’s income, the undersigned found
that it was “incredulous” that Father’s business could gross
$762,412 but his W-2 Income only reflected a mere
$15,300; reviewing the exhibits and transcript
demonstrated that Father used the corporate bank account
for both personal and business expenses; and thus, it was
not an error by the Officer to include certain addbacks to
Father’s income;
4. It was also not an error for the Officer to add back
depreciation, despite Father’s claim that depreciation was
depleted by 2019 and would not carry over, given that
Father was significantly incredulous with respect to his
overall income and finances;
5. Finally, it was not an error to exclude the theoretical tax
consequences of the added back income as these tax
implications were fictitious (given that Father had not even
filed his 2020 tax return), and upon review of his 2019 tax
return, he paid a mere $ 161 dollars in federal taxes as the
sole owner of a business that grossed $762,412.37.
1925(a) Op. at 7-8 (footnotes and citation omitted). Father timely appealed.
Father raises the following issues:
A. Whether the [trial] court abused its discretion and
committed an error of law in assessing marital income and
assets resulting in an unjustifiable support order and
distribution in violation of the divorce code and common
law?
B. Did the trial court err in rejecting the Father’s credibility
of witness and evidence?
Father’s Br. at 6 (suggested answers and unnecessary capitalization omitted).
Father’s issues are related, and we will address them together.
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Father first argues he proved the child support payments were
“erroneously calculated given that the Court used an egregious earnings figure
and failed to consider business and other deductions in deviation of the
applicable statute and common law.” Id. at 11. He claims the hearing officer
and trial court had included in his income depreciation business equipment,
without considering expenses that reduced his gross income.
He further claims the hearing officer included as income deductions from
prior years, including tax deductions for depreciation and auto expenses. He
claims the trial court erred in accepting the “officer’s decision that the
corporate debt and personal loans for the benefit of the company did not affect
the Father’s income and assets.” Id. at 19. Father claims that the court’s
statement that his true income “appears intentionally designed to be a
mystery and, in any other corporation, would never be tolerated,” is biased
and not based on facts. Id. Father maintains that the hearing was in February,
before tax filing, and the court made “disparaging comments” that his taxes
were not completed, even though Mother also had not completed her taxes.
Id. at 21. Father further states that the trial court erred in denying a mortgage
adjustment and in awarding costs for childcare expenses.2
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2 Father continues to make arguments regarding APL. However, as
acknowledged in his response to the Rule to Show Cause, because a divorce
decree has not been entered, the award of APL was an interlocutory order and
we cannot review it at this time. Reply to Order to Show Cause, filed Aug. 31,
2021; see also Leister v. Leister, 684 A.2d 192, 193 (Pa.Super. 1996) (en
banc) (APL is not appealable until all economic issues have been resolved).
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Father next contends the court erred in failing to weigh the evidence
and “thereby render[ed] an unfair support obligation.” Father’s Br. at 25. He
claims the court incorrectly assessed the property value, even though he
presented credible evidence. He asserts “the Hearing Officer decided without
justification to include a depreciation deduction in the sum of $29,330 from
the Father’s business as income to him,” and “refused to accept testimony as
to the source of the depreciation.” Id. at 27. He claims the Hearing Officer
also refused to review the tax returns in detail, which would have revealed
that the equipment was old and had very little value. He claims the decision
failed to consider the substantial corporate debt of the company, including
approximately $430,000 in debt and personal loans Father allegedly took for
the company.
He also claims the court charged Father with unrealized income without
considering expenses that reduced that income. For example, he claims the
court charged $26,650 for income for reimbursed expenses without
considering the expense for interest paid on loans and mileage, which, he
claimed, “directly impacted the [Father’s] gross income.” Id. at 31. He
maintains the court “imputed excessive income” without adjusting for the
higher taxes that would be owed. He further claims he submitted evidence
that the depreciation was not fictional but rather necessary to perform its
purpose. Father also claims the vehicle was used for transporting equipment
and the reverse mortgage lien reduced the value of the home. He claims his
evidence was uncontradicted.
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We review support awards for an abuse of discretion. Spahr v. Spahr,
869 A.2d 548, 551 (Pa.Super. 2005). “A finding that the court abused its
discretion requires proof of more than a mere error in judgment, but rather
evidence that the law was misapplied or overridden, or that the judgment was
manifestly unreasonable or based on bias, ill will, prejudice or partiality.” Id.(quoting Isralsky v. Isralsky, 824 A.2d 1178, 1186 (Pa.Super. 2003)).
“Support orders ‘must be fair, non-confiscatory and attendant to the
circumstances of the parties.’” Id. at 552 (quoting Fennell v. Fennell, 753
A.2d 866, 868 (Pa.Super. 2000). If a spouse owns a business, “the calculation
of income for child support purposes must reflect the actual available financial
resources of the . . . spouse.” Id. (quoting Fitzgerald v. Kempf, 805 A.2d
529, 532 (Pa.Super. 2002)). In addition, “all benefits flowing from corporate
ownership must be considered in determining income available to calculate a
support obligation.” Id. (quoting Fennell, 753 A.2d at 868) (emphasis
omitted). “[T]he 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.” Id. (quoting Fennell, 753 A.2d at 868).
The trial court addressed Father’s appellate claims, concluding it did not
abuse its discretion. The court found it was not error for the hearing officer to
provide add-backs to Father’s income to determine his actual cash flow,
reasoning that Father admitted to not maintaining separate personal and
business accounts, confirmed he was the sole owner of the company, and
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testified that many of his personal expenses were deducted from his business.
1925(a) Op. at 13-15.
It further found the officer did not err by adding back into Father’s
income the depreciation from the 2019 tax return, as depreciation is not
automatically deducted from gross income for child support purposes. Id. at
15-19. The court also explained it was not error to add back to Father’s income
his expenses for interest and mileage, noting interest on loans was not
included in the items that should be deducted from monthly gross income, the
expenses were not bona fide expenses, and Father did not prove the expenses
increased his business income or were utilized for the business. Id. at 19-22.
The court concluded it was not an abuse of discretion not to consider the tax
consequences of the income decisions, reasoning any future tax consequences
were theoretical. Id. at 22-23. The court further concluded it did not err in
including the childcare expenses as Mother did not have to agree to use
Father’s mother as a childcare provider, the record contained no information
as to her availability, and the cost was di minimis. Id. at 23-25. Finally, the
court found it did not err in denying a reverse mortgage deviation, as Father
owned the house, which was pre-marital property. Id. at 25-26.
After review of the briefs, the record, the relevant law, and the well-
written opinion of the Honorable Daniel J. Clifford, we conclude his opinion
properly disposes of all of Father’s issues. We therefore affirm on the basis of
the trial court’s opinion. Id. at 13-26.
Order affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/03/2022
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