Miller, K. v. Orr, M. ( 2022 )


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  • J-A29037-21
    NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
    KIMBERLY MILLER                                 :   IN THE SUPERIOR COURT OF
    :        PENNSYLVANIA
    Appellant                   :
    :
    :
    v.                                  :
    :
    :
    MICHAEL J. ORR                                  :   No. 266 WDA 2021
    Appeal from the Order Entered February 1, 2021
    In the Court of Common Pleas of Butler County Domestic Relations at
    No(s): F.C. No. 15-90762-D
    BEFORE: BENDER, P.J.E., BOWES, J., and PELLEGRINI, J.*
    MEMORANDUM BY PELLEGRINI, J.:                              FILED: JANUARY 19, 2022
    Kimberly Miller (Miller) appeals an order of the Court of Common Pleas
    of Butler County (trial court) adopting in part a master’s recommendations
    regarding the equitable distribution of marital assets belonging to her and her
    ex-husband, Michael J. Orr (Orr). We affirm.
    I.
    Miller and Orr were married on August 31, 2013. During the marriage,
    on July 10, 2015, they purchased from Orr’s parents a home (the marital
    residence)    located     at   423   Canterbury         Trail   in   Cranberry   Township,
    Pennsylvania. Only Orr’s name appeared on the deed to that home, and the
    mortgage on the property was solely in his name. Orr’s parents had sold the
    ____________________________________________
    *   Retired Senior Judge assigned to the Superior Court.
    J-A29037-21
    marital residence for $495,000.00 and, at closing, Orr and Miller made a down
    payment of $97,042.61 in the form of a check linked to a joint marital
    account.1
    Miller and Orr began divorce proceedings on November 9, 2015. At that
    time, they had no children and had only resided in the marital residence for
    122 days. The equitable distribution of their marital property was overseen
    by a master who held an evidentiary hearing on April 30, 2018.2 An appraiser
    testified at the hearing that the marital residence had a fair market value of
    $596,000.00 at the time of sale and all other relevant times.
    Orr’s father also testified about the circumstances of the sale of the
    marital residence to his son. He explained that Miller and Orr had initially
    planned to have both of their names appear on the deed of the home, but that
    Miller’s name was not included on the deed because her credit score was not
    good enough to qualify for a mortgage.           Orr’s father also stated that the
    purchase price was lowered so that Orr could afford it, and that by selling the
    home to Orr, the family would save money on transfer taxes and realtor
    ____________________________________________
    1Another $8,000.00 was due at closing, but that sum is not at issue in this
    appeal.
    2 A premature appeal was filed before Miller’s exceptions were ruled upon, and
    in Miller v. Orr, 725 WDA 2019 (Pa. Super. June 3, 2020) (unpublished
    memorandum), this Court quashed the appeal and remanded the case so that
    the trial court could rule on those exceptions and render a final appealable
    judgment.
    -2-
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    commissions, which would have “inflate[d] the price of the house[.]”       See
    Master’s Hearing, 4/30/2018, at pp. 190, 221.
    In addition to the dispute over the value and remaining equity in the
    marital residence, each of the parties also asserted that their respective
    parents had made loans to Miller and Orr that were, essentially, marital
    liabilities. Miller claimed that Orr was jointly responsible for paying back her
    parents’ loan of $5,000.00, while Orr claimed that Miller was jointly
    responsible for paying back his parents’ loan of $12,500.00.
    On June 5, 2018, the master filed a Report and Recommendation
    containing findings of fact and determinations as to how Miller and Orr’s
    marital property should be divided. The master found that each party should
    receive an equal share of the equity in the marital residence subject to
    equitable distribution – $43,004.53.     The master arrived at that sum by
    making several deductions from the home’s total market value, including the
    remaining mortgage amount, Orr’s pre-marital funds used to purchase the
    home, and a reduction of the purchase price from the home’s fair market value
    by Orr’s parents.
    As to the reduction in the purchase price, the master relied on testimony
    from Orr’s father that the home was deliberately sold for less than its market
    value so that it would be affordable to Orr.      Orr’s father did not himself
    characterize the lower purchase price as a “gift,” but he had stressed that the
    price of the home was intended to benefit Orr and not Miller. See Master’s
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    Hearing, 4/30/2018, at pp. 214-16.3 Additionally, the master found that “to
    the extent any ‘benefit of the bargain,’ or ‘gift,’ on the transfer of [the marital
    home] from [Orr’s parents] to [Orr] existed, it was due solely to the
    relationship of the parents to the son, the sole party to whom the property
    was transferred, and was not intended to be a benefit or gift [to Miller].”
    Master’s Report and Recommendation, 6/5/2018, at 3.
    As to the opinion of Miller’s expert that the marital residence had a fair
    market value of $596,000.00, the master described that amount as “inflated.”
    Id. at 4. Instead of adopting that figure, the master found the market value
    of the residence to be “$500,000.00 after consideration of expenses of sale,
    transfer and/or liquidation associated with the asset.”        Id. (emphasis in
    original).   Like Orr’s father, who described how transfer taxes and realtor
    commissions would “inflate” the price of the house, the master seemed to
    view the absence of those costs as a benefit of the bargain or gift that was
    intended for Orr and not Miller. See id.
    As to the asserted loans from the parties’ parents, the master declined
    to find any joint marital liability. To the extent Orr’s parents loaned a sum of
    $12,500.00, Orr was directed to assume sole liability for paying it back. To
    ____________________________________________
    3 The remaining distributions of the marital assets are not germane to any of
    the issues raised in this appeal.
    -4-
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    the extent Miller’s parents loaned a sum of $5,000.00, Miller was directed to
    assume sole liability for paying it back.
    Miller   timely   filed   exceptions   to   the   master’s   Report    and
    Recommendation. Of relevance in this appeal, Miller challenged the valuation
    of the marital residence, as well as several determinations that certain sums
    of money were not subject to equitable distribution. Specifically, Miller argued
    that the record does not support the findings that the proceeds of the sale of
    Orr’s pre-marital home ($60,995.47) were not marital property, that Orr
    received a gift from his parents toward the purchase of the marital residence
    ($101,000.00), and that Orr and Miller received a loan of $12,500.00 from his
    parents that each were equally responsible for paying back. Miller argued that
    those errors made the equal distribution of the remaining marital assets
    inequitable.
    A hearing was held on Miller’s exceptions on January 7, 2021. The trial
    court granted in part and denied in part Miller’s exceptions to the master’s
    Report and Recommendation.         Miller timely appealed, raising five issues
    concerning the factual findings that determined the respective amounts to be
    distributed to her and Orr upon the dissolution of their marriage:
    1. Whether the Trial Court erred and abused its discretion in
    affirming the Master’s determination that the equity in the marital
    residence . . . was $43,004.53 based on valuing the marital
    residence at $500,000.00 when the only testimony and evidence
    offered on the value of the marital residence was that of [Miller’s]
    expert appraiser, who valued it a $596,000.00.
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    2. Whether the Trial Court erred and abused its discretion in
    affirming the Master’s decision to award $60,995.47 to [Orr] from
    the equity in the Marital Residence and then dividing the
    remaining equity equally between the parties.
    3. Whether the Trial Court erred and abused its discretion to the
    extent that it or the Master determined that any gift was made
    from Husband’s parents to [Orr] in the purchase of the Marital
    Residence as there is no evidence, at all, in record supporting the
    existence of a gift.
    4. Whether the Trial Court’s determination of the existence of a
    $12,500.00 marital loan from [Orr’s] parents fails to be supported
    by the record and, therefore, is an abuse of discretion.
    5. Whether the Trial Court erred and abused its discretion in
    affirming the Master’s equal division of the remaining marital
    assets, after awarding [Orr] a significantly disproportionate
    amount of the equity in the Marital Residence.
    Appellant’s Brief, at 7 (numbering and punctuation modified).4
    II.
    A.
    Miller first contends that the trial court erred in valuing the marital
    residence at $500,000.00 because the record evidence establishes a fair
    market value of $596,000.00. We find that no relief is due as to this claim
    ____________________________________________
    4 The trial court’s rulings on equitable distribution are subject to an abuse of
    discretion standard of review. See Dalrymple v. Kilishek, 
    920 A.2d 1275
    ,
    1280 (Pa. Super. 2007).
    -6-
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    because the certified record indicates that the master and the trial court, in
    fact, applied a market value which Miller argues is the proper amount.5
    While not completely explicit, it appears that the master and the trial
    court operated from the starting premise that the marital residence had a total
    market value of $596,000.00, and they then derived the respective equitable
    distribution amounts by deducting from that sum the outstanding mortgage
    debt ($396,000.00), the proceeds from the sale of Orr’s pre-marital residence
    ($60,995.47), and the amount of a gift Orr received from his parents in the
    form of a reduced purchase price ($596,000.00 (market value) - $495,000.00
    (purchase price) = $101,000.00 (gift amount)).       See Trial Court Opinion,
    2/3/2021, at 2.
    From the appraised market value of $596,000.00, there remained
    $38,000.53 after those deductions. For reasons that are not clear (though
    also not disputed), the master and the trial court added an additional
    $5,000.00 to the total value of the marital residence subject to equitable
    distribution, finally reaching the sum of $43,000.53.    As can be seen, the
    master and the trial court calculated the equity in the marital residence only
    after starting with an “inflated” market value of $596,000.00 and then making
    ____________________________________________
    5 Alternatively, and as discussed further below, any equity in the marital
    residence derived from a fair market value over the purchase price of
    $495,000.00 was considered a gift from Orr’s parents for his benefit alone,
    excluding such equity from Miller and Orr’s joint marital property.
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    the previously discussed deductions to that figure. Miller has raised those
    deductions as separate grounds for appellate relief so they will be addressed
    in turn below.
    B.
    Miller contends that the trial court erred in finding that Orr was entitled
    to the proceeds of the sale of a pre-marital residence and then deducting that
    sum ($60,995.47) from the equity in the marital residence that is subject to
    equitable distribution.
    “Marital property” is subject to equitable distribution and is defined
    broadly as “all property acquired by either party during the marriage and the
    increase in value of any nonmarital property[.]”        23 Pa.C.S. § 3501(a).
    Property acquired prior to the marriage is not included in that definition. Id.
    at § 3501(a)(1).
    As a general matter, it is presumed that any funds comingled with
    marital financial assets become marital property. See Sergi v. Sergi, 
    506 A.2d 928
    , 932-33 (Pa. Super. 1986).         However, this presumption can be
    overcome if the finder of fact determines that the comingled funds can be
    “traced” to a pre-marital source. See Busse v. Busse, 
    921 A.2d 1248
    , 1257
    (Pa. Super. 2007); Winters v. Winters, 
    512 A.2d 1211
    , 1215-16 (Pa. 1986);
    see also 23 Pa.C.S. § 3501(a)(1) (excluding from definition of marital
    property assets “acquired prior to marriage or property acquired in exchange
    for property acquired prior to the marriage.”).
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    It is undisputed that Orr purchased the pre-marital residence before he
    married Miller. The property was titled and mortgaged in his name alone.
    Miller and Orr cohabitated in the pre-marital residence for years before they
    were married, but cohabitation alone does not make the home marital
    property. See 23 Pa.C.S. § 3901(a)-(b). Moreover, there is no evidence in
    the record that the value of the pre-marital residence appreciated between
    the period of habitation through the point at which the pre-marital residence
    was sold.
    Although the proceeds of the sale of the pre-marital residence were
    briefly comingled with marital funds used to purchase the marital residence,
    any presumption in favor of Miller was overcome. The equity Orr accumulated
    in his pre-marital home prior to the marriage was not marital property. The
    proceeds from the sale of the pre-marital home were kept in the joint marital
    account for a short time immediately preceding the closing on the purchase
    of the marital residence. The sale of the pre-marital home was also clearly
    intended to fund the purchase of the marital residence. Thus, as the funds
    used to purchase the marital residence could easily be traced back to a pre-
    marital source, the trial court did not err in adopting the master’s
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    recommendation to exclude the contested sum of $60,995.47 from equitable
    distribution.6
    C.
    Miller’s next issue is that the trial court abused its discretion in finding
    that Orr’s parents lowered the purchase price of the marital residence by
    $101,000.00, constituting a “gift” to Orr that would not be subject to equitable
    distribution.
    As stated above, “marital property” is defined as “all property acquired
    by either party during the marriage and the increase in value of any
    nonmarital property.” 23 Pa.C.S. § 3501(a). Certain assets, however, are
    not to be considered marital property, including “[p]roperty acquired by gift
    . . . bequest, devise or descent.” Id. at 3501(a)(3). “A valid inter vivos gift
    requires donative intent, delivery, and acceptance.”           In re Estate of
    Moskowitz, 
    115 A.3d 372
    , 386 (Pa. Super. 2015).
    In this case, Miller presented an expert witness who estimated that from
    the time of its sale to the date of the master’s hearing, the marital home had
    a fair market value of $596,000.00. Miller and Orr agree that Orr’s parents
    deliberately sold the home for substantially less than that amount.            The
    ____________________________________________
    6The master and trial court concluded that an additional sum held in the joint
    marital account and used for the down payment at closing ($36,847.14) could
    not be traced to the sale of the pre-marital home, making it marital property.
    This conclusion is not in dispute.
    - 10 -
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    parties’ dispute centers on whether there is evidence from which the master
    and the trial court could conclude that Orr’s parents had donative intent to sell
    the home for an amount less than market value solely as a benefit to their
    son, Orr.
    At the hearing on Miller’s exceptions, Orr’s father testified that the
    reduction in price from the home’s market value was not intended as a gift of
    ownership equity to Miller. That is, Orr’s parents priced the house at the level
    they did so that it “could be afforded” and so “that the young man that grew
    up in the house [Orr] could have a home.” Master’s Hearing, 4/30/2018, at
    pp. 214-16. Orr’s father also stressed that it was important that the home be
    deeded and mortgaged in his son’s name alone because from his “past
    experience, things happen, and it’s a home that he grew up at, and we wanted
    the home to be in his name.” Id. at p. 215.
    Based on this testimony and in combination with the fact that the marital
    residence was sold for less than the estimated market value, the record
    supports the conclusion of the master and the trial court that any equity in
    the home arising out of a price reduction was intended solely as a benefit to
    Orr. This finding also explains why, in some of the calculations of the master
    and the trial court, the total value of the marital residence was referred to as
    the purchase price of $495,000.00 rather than the higher market value. For
    the purposes of equitable distribution, any additional equity over the amount
    of the purchase price would be excludable as non-marital property, making it
    - 11 -
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    unnecessary to identify the exact amounts of the home’s market value and
    the reduced purchase price.         Accordingly, the trial court did not abuse its
    discretion as to its findings regarding the valuation of the marital residence
    and the gift from Orr’s parents through the reduced purchase price of that
    home.
    D.
    Miller next contends that the record does not support the trial court’s
    finding that Orr’s parents lent him and Miller $12,500.00, which both Miller
    and Orr were equally responsible for paying back.           However, the record
    reflects that no such finding was made. The master and the trial court ruled
    that if there was a loan by Orr’s parents for $12,500.00, he alone was
    responsible for paying that debt. See Trial Court Opinion, 2/3/2021, at 4.
    Because no error is apparent and Miller has suffered no identifiable prejudice,
    her claim concerning the purported loan warrants no appellate relief.7
    E.
    Miller’s final claim is that due to the disproportionate distribution of
    equity in the marital residence, the trial court erred in equally dividing the
    remaining marital assets. However, because we have already found that the
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    7  The master and the trial court similarly found that to the extent Miller
    received a loan from her own parents, she was solely responsible for paying
    that sum back to them. From what can be gleaned from the record, none of
    the equitable distribution amounts either add or deduct any sum based on
    alleged loans from Miller or Orr’s respective parents.
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    trial court did not err with respect to how the equity in the marital residence
    was divided, we necessarily conclude that Miller’s derivative claim has no
    merit. Thus, the trial court’s order must stand.
    Order affirmed.
    Judgment Entered.
    Joseph D. Seletyn, Esq.
    Prothonotary
    Date: 01/19/2022
    - 13 -
    

Document Info

Docket Number: 266 WDA 2021

Judges: Pellegrini, J.

Filed Date: 1/19/2022

Precedential Status: Precedential

Modified Date: 1/19/2022