Jeannette F. Weller, v. Randy L. Weller

Jeannette F. Weller, v. Randy L. Weller

Civil Action-Family Law-Divorce-Equitable Distribution-Discretion of Special Master in Divorce-Credibility-Division of the Marital Estate-Property Acquired After Separation-Fair Rental Value-Dispossessed Spouse-Clean Hands

Both parties filed Exceptions to the Order adopting the Report and Recommendation of the Special Master in Divorce distributing the marital estate.  The parties argue that the Special Master erred and/or abused his discretion by awarding each party fifty percent (50%) of Defendant’s (“Husband’s”) annuities and fifty percent (50%) of the marital estate, failing to award Plaintiff (“Wife”) fair rental credit for the time she was dispossessed of the marital home and determining that $36,000.00 in Wife’s savings accrued after separation did not constitute marital property subject to distribution. 

1.  The report and recommendation of the Special Master is advisory only. 

2.  The trial court is required to make an independent review of the report and recommendation to determine whether they are appropriate.

3.  In determining issues of credibility, the findings of the Special Master are to be given the fullest consideration and weight.

4.  The award of fifty percent (50%) of two (2) of Husband’s annuities to Wife and fifty percent (50%) of the marital estate to each party will benefit the parties where Wife is in possession of only $1,000.00 of the marital estate with limited cash available to her, Huband has been living in the marital residence rent free since separation, Wife has had limited living expenses for several years after separation, Husband has been awarded credits for real estate taxes and insurance and awarding fifty percent (50%) of the annuities to each party will ensure that both parties will have a steady stream of income. 

5.  The purpose of an award of credit for fair rental value of the marital residence is to compensate a dispossessed spouse for the value of the property during the time when the dispossessed spouse was not able to live at the residence.

6.  An award of fair rental value is not mandatory.

7.  To qualify for credit, the dispossessed party generally must show that he or she had clean hands such that he or she had good reason to leave the marital residence or was asked to leave by the other spouse.

8.  Where the record reflects that Wife left the marital residence voluntarily and was not asked to leave by Husband, Wife was not dispossessed of the marital residence rendering an award of fair rental credit appropriate.

9.  Where there is no evidence of record to support the argument that $36,000.00 saved by Wife resulted from funds during the marriage and the Special Master found Wife’s testimony that she earned these funds after separation through cleaning homes, running errands and performing personal care services, the Special Master did not err or abuse his discretion in determining that the $36,000.00 saved by Wife after separation did not constitute marital property subject to equitable distribution.

L.C.C.C.P. No. 2020-20498, Opinion by John C. Tylwalk, President Judge, August 11, 2023.

                   IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY

                                                PENNSYLVANIA

                                      CIVIL ACTION – FAMILY DIVISION

JEANNETTE F. WELLER,                         :         NO. 2020-20498

          Plaintiff                                   :

                                                          :

          v.                                             :

                                                          :

RANDY L. WELLER,                                 :

          Defendant                                :

                                                ORDER OF COURT

          AND NOW, this 11th day of August, 2023, upon consideration of the parties’ Exceptions and Cross-Exceptions to the Special Master’s Report, it is hereby Ordered as follows:

1.  Defendant’s Exception regarding the designation of the party to receive the 12 % tax reimbursement set forth in Paragraph 22 of the Proposed Decree is SUSTAINED.
2. Defendant’s Exception regarding the Special Master’s award of 50 % of Husband’s annuities to Wife is OVERRULED.
3. Defendant’s Exception to the Special Master’s failure to include $36,000.00 in cash toward Plaintiff’s marital assets is OVERRULED.
4. Defendant’s Exception to the scheme of distribution of marital property determined by the Special Master is OVERRULED.
5. Plaintiff’s Cross-Exception to the 50/50 split of marital property determined by the Special Master is OVERRULED.
6. Plaintiff’s Cross-Exception to the Special Master’s failure to award Plaintiff a fair rental credit for the marital residence is OVERRULED.
7. Plaintiff’s Cross-Exception to the Special Master’s award of a 12% tax reimbursement to Defendant is OVERRULED.
8. Paragraph 10 of the Special Master’s Decree is corrected as follows:

“Husband shall pay $196,499.11 to Wife with an adjustment for credits and reimbursements as hereinafter set forth within sixty (60) days after Final Decree.” 

• The Court accepts and affirms the remaining recommendations of the Special Master and will sign the Decree which is attached hereto as Exhibit “A.”
• Jeanette F. Weller, Plaintiff, and Randy L. Weller, Defendant, are divorced from the bonds of matrimony pursuant to Section 3301(d) of the Divorce Code.

BY THE COURT:

___________________________, P.J.

JOHN C. TYLWALK

JCT/jah

Cc:  Loren A. Schrum, Esquire/Barley Snyder

       Max J. Smith, Jr., Esquire/11 East Chocolate Avenue, Suite 300/Hershey, PA 

            17033

       Judith Huber, Esquire/Law Clerk

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY

                                                PENNSYLVANIA

                                      CIVIL ACTION – FAMILY DIVISION

JEANNETTE F. WELLER,                         :         NO. 2020-20498

          Plaintiff                                   :

                                                          :

          v.                                             :

                                                          :

RANDY L. WELLER,                                 :

          Defendant                                :

APPEARANCES:

LOREN A. SCHRUM, ESQUIRE             FOR JEANNETTE F. WELLER

BARLEY SNYDER

MAX J. SMITH, JR., ESQUIRE               FOR RANDY L. WELLER

JSDC LAW OFFICES

OPINION, TYLWALK, P.J., AUGUST 11, 2023.

          The parties in this divorce action were married on January 22, 1977 and separated in September of 2017 when Plaintiff Jeannette F. Weller (‘Wife”) left the marital residence.  A hearing before Special Master Keith L. Kilgore, Esquire (“Special Master”) was conducted on February 22, 2022.  The Special Master’s Report and Recommendations were filed on December 5, 2022.  Defendant Randy L. Weller (“Husband”) has filed Exceptions and Wife has filed Cross-Exceptions to the Report and Recommendations which are presently before the Court.

This was a first marriage for both parties.  The parties married during high school when Wife became pregnant.  Husband completed his high school education, but Wife left school during the 11^th grade and did not obtain her diploma.  The parties had two daughters during the marriage, both of whom are adults and living on their own.

At the time of the hearing, Husband was 65 years old.  He retired from his employment at Hershey Foods (‘Hershey”) when he was 55 years old and has not been employed since his retirement.  He worked at Hershey for 36 years with annual earnings between $43,906.00 and $62,165.00.  He was hospitalized with Lyme Disease in 2014 and has had lingering health issues since then; however, these conditions do not affect his daily activities.   Husband will attain the age of 66 ½ in late 2023 and will qualify for monthly Social Security benefits of $2,411.00.

Wife was 63 years old at the time of the hearing.  She suffers from high blood pressure, but this does not impede her ability to work.  She is self-employed as a house cleaner.  She also runs errands and cares for a client’s wife who has dementia.  Occasionally, Wife takes care of her client’s wife when he is out-of-town for several days for which she is paid $5,000.00 to $6,000.00.  However, this has not occurred during the past few years.  When Wife left the parties’ home, she had a vehicle in her possession which she later sold for $1,000.00.   At the time of the hearing, she was using a vehicle which her client gave her so that she would have a dependable vehicle for running his errands and taking his wife to appointments. 

Wife was the primary homemaker and caretaker of the parties’ children.  She began cleaning houses when the parties’ older daughter was seven years old and has continued to work since that time.  She currently earns approximately $1,600.00 per month.  She is always paid in cash and does not claim her income or pay taxes on it.   Since separation, the parties filed joint returns but Wife did not participate in the preparation and would merely meet Husband to sign the return.  Wife’s earnings were never included on the parties’ joint tax returns.  Wife testified that she was able to save $36,000.00 in cash since separation.   However, that amount has been reduced to $10,000.00 due to various expenditures related to living expenses.  Wife will have no Social Security benefits of her own.  After the divorce, she will be entitled to one-half of Husband’s monthly Social Security benefit of $2,411.00 ($1,205.50) if she does not remarry.  

During the marriage, the parties had joint checking and savings accounts.  Husband has maintained these accounts since separation.  Wife testified that Husband controlled all finances during the marriage and that she never attempted to access these accounts, either before or after separation.  Husband testified that he has deposited all income tax refunds and stimulus checks received post-separation into these accounts.

Husband has two annuities – one with Fidelity and another with North American Company.  These resulted from the rollover of his retirement accounts from his employment at Hershey.  At the time of separation, the value of the Fidelity annuity was $258,551.91 and the value of the annuity with North American Company was $231,637.88.  As of September 8, 2022 the Fidelity annuity had a value of $170,500.42.  As of September 18, 2022, the value of the North American Company annuity was $197,856.29.  In order to cover expenses, Husband withdraws a total of $1,744.00 monthly from the annuities.  His annual withdraws total $9,566.49 from Fidelity and $14,178.78 from North American.  Wife remained on Husband’s health insurance at the time of the hearing.   For several years after separation, Wife dropped off approximately $650.00 at the marital home every month for Husband to cover her health insurance and to put toward home expenses.  This arrangement continued until March or April of 2020 when Wife was unable to work during the pandemic. Husband has continued to make the payments on her health insurance. 

          During the marriage, the parties resided at the marital residence located in Annville.  Husband has continued to live there since separation and has indicated that he desires to keep the home.  The home was appraised at $194,000.00 as of a March 2022.  After Wife moved out of the marital home in September of 2017, she resided with the couple’s youngest daughter, Brooke, paying $50.00 per week toward expenses.  She lived with Brooke for three years and then moved in with her sister for a short time.  At the time of the hearing, Wife resided in an apartment in Palmyra for which she paid $750.00 per month. 

          The Special Master determined that the marital estate should be divided equally between the parties.  The Special Master denied Wife’s Request for a fair rental credit for the marital home.   The Special Master determined that Wife’s $36,000.00 savings was not marital property subject to distribution and did not assign that amount to Wife toward her 50% share of the marital assets. 

          The Special Master found the entirety of the two annuities which resulted from the rollover of Husband’s Hershey accounts to be marital and awarded Wife a 50% share of both annuities.  From the time of separation until November 30, 2022, Husband received annuity payments totaling $108,128.00 and paid taxes on these distributions at the rate of 12%.  The Special Master determined that Husband should be entitled to a reimbursement of the portion of the taxes he paid on Wife’s 50% share ($54,064.00) for a credit of $6,487.68.  The Special Master noted that Husband would be entitled to a continuing reimbursement of 12% for taxes on Wife’s 50% share of the annuities he received after December 1, 2022 and that Wife would be entitled to 50% of the monthly annuity payments from December 1, 2022 until a Qualified Domestic Relations Order (“QDRO”) was approved by the Court and the administrators of the annuities begin making payments to her.

          After deducting the value of the two annuities ($368,356.71) from the total value of the marital estate in the possession of Husband ($762,354.94), the Special Master found that the net marital assets in Husband’s possession for distribution amounted to $393,998.23, with each party being entitled to their 50% share ($197,499.11).  Husband was directed to pay $197,499.12 to Wife, with adjustment for credits and reimbursements, within sixty days of the entry of the Final Divorce Decree.[1]  In addition to the tax reimbursement of $6,487.68 for the annuity payments, the Special Master awarded Husband a $6,368.12 credit for real estate tax and insurance and a reimbursement of $18,816.00 for payment of Wife’s health insurance after 2020 when Wife was unable to work due to the pandemic.

          In his Exceptions, Husband assigns error to the Special Master designating Wife as the recipient of a 12% tax reimbursement for the marital annuities received by Husband in the Proposed Decree, the award of 50% of the annuities to Wife, the failure to assign Wife her $36,000.00 savings toward her share of marital assets, and the scheme of distribution determined by the Special Master.  In Wife’s Counter-Exceptions, she contends that she should have been awarded a greater share of the marital assets.  She also assigns error to the Special Master’s failure to award her a fair rental credit for the marital home and in awarding the 12% income tax credit for the annuity distributions received by Husband.

The master’s report and recommendations are advisory only; the trial court is required to make an independent review of the report and recommendations to determine whether they are appropriate.  Kohl v. Kohl, 564 A.2d 222 (Pa. Super. 1989).  Although not bound by the Report of a SM, the Court is to give great consideration to the SM’s findings and recommendations.  Morschauser v. Morschauser, 516 A.2d 10 (Pa. Super. 1986).  In determining issues of credibility, the SM’s findings are to be given the fullest consideration and weight. Schuback v. Schuback, 603 A.2d 194 (Pa. Super. 1992).  Findings of credibility are not to be disturbed absent an abuse of discretion.  Doherty v. Doherty, 859 A.2d 811 (Pa. Super. 2004).   A master’s findings are given such deference, particularly on the question of credibility of witnesses, becausethe master has had the opportunity to observe and assess the behavior and demeanor of the parties. Moran v. Moran, 839 A.2d 1091, 1094 (Pa. Super. 2003).

Husband’s Exceptions

In Paragraph 21 of the Proposed Decree, the Special Master states that “Husband is entitled to a tax reimbursement of 12% of the marital annuities received by him from October 1, 2017 through November 30, 2022 of $108,128, fifty percent of which is $54,864.00, 12% reimbursement to Wife of $6,487.68.”  After filing the Report and Recommendations, the Special Master informed both parties that the designation of Wife as the recipient of the tax reimbursement was an inadvertent error.  (Exhibit “A” to Defendant’s Brief)  The Special Master also corrected this error on the Proposed Decree he submitted to the Court.

Although Wife disputes the propriety of this reimbursement, she acknowledges that if anyone is due a credit for these tax payments, it is Husband.[2]  We agree.  As discussed later in this Opinion, Husband will receive the 12% tax reimbursement since he was assigned the full amount of the distributions without deduction for taxes by the Special Master.  Thus, we will sustain this Exception and correct this mistake in the Order which accompanies this Opinion.

Award of 50% of Both Annuities to Wife/ Scheme of Distribution

The Special Master awarded each of the parties 50% of each annuity account and recommended that any early withdrawals could only occur with the written consent of both parties.  After determining that an immediate offset approach was not appropriate as there were insufficient assets to offset the value of the two annuities, the Special Master directed that a Qualified Domestic Relations Order (“QDRO”) be prepared to effectuate the distribution of these assets and that Wife should begin to receive 50% of the monthly distributions.  

Husband assigns error to the Special Master’s award of fifty percent of both annuities to Wife and claims that the recommended scheme of distribution will work to his detriment.   Husband explains that he does not wish to sell the marital residence and he will be forced to borrow money at a high interest rate in order to buy out Wife’s interest in the home.  He notes that Wife will receive cash through distribution of the parties’ bank accounts, post-separation annuity payments received by Husband, and her portion of the income tax refunds and stimulus payments.  He asks that, instead of him being required to pay over this amount, Wife should be awarded the entire North American Charter annuity and a significant percentage of the Fidelity annuity so that he would not be forced to incur what he believes would be an unnecessary debt. He suggests that she can roll over the annuities into an IRA account which will increase her monthly income and Husband will be able to keep the house mortgage-free. Wife argues that, if necessary, Husband should be required to list the marital home for sale in order to make the required payment to her.

After careful consideration, we believe the Special Master’s award of 50% of the two annuities to Wife and the recommended scheme of distribution will work to the overall benefit of both parties.  Wife is only in possession of $1,000.00 of the marital estate.  Wife has limited cash available to her and it is likely that she will need immediate funds for the purchase of items like a new vehicle and her living expenses.  Husband has been living in the marital residence mortgage and rent free since the parties’ separation.  He has been awarded credits for real estate taxes and insurance and Wife is required to reimburse him for paying for her health insurance payments and the taxes on the annuity disbursements.  This will significantly reduce the amount he must pay to Wife, even with the $440.00 Husband is required to reimburse Wife for the real estate appraisal.  It may be true that awarding Wife a more substantial portion of the annuities would enable Husband to satisfy his obligation to her without impacting his ability to keep the marital residence.   However, if both parties retain a 50% share of the annuities, both will have a steady stream of income, in addition to Husband’s Social Security benefits, in the future.  With his share of the marital bank accounts, annuity distributions, and his Social Security benefits, Husband will have sufficient resources to make payments in the event it is necessary for him to take out a second mortgage on the marital home in order to satisfy his obligation to Wife. 

Failure to Assign $36,000.00 Savings Toward Her Share of Marital Assets

The Special Master found that Wife was able to save $36,000.00 after separation; however those savings have been reduced to $10,000.00.  Husband complains that the Special Master failed to include the $36,000.00 in cash in Wife’s possession as marital property.  Wife testified that during the time period 2017-2019, she earned $1,600.00 per month.  Wife testified that after she moved out of the marital home, she lived with her daughter and paid her $50.00 per week toward living expenses.  When she moved out of her daughter’s home, she had $36,000.00 in cash.  Husband claims that it would have been impossible for her to accumulate $36,000.00 during that short time period and that “[t]he more plausible scenario is the one advanced by Husband – that Wife must have been saving cash throughout the parties’ marriage in anticipation of her planned separation.”  (Husband’s Brief at pp. 8-9) Husband argues that “the most rational” conclusion is that the money was earned by Wife during the marriage and should have been considered a marital asset.

There is no evidence in the record to support Husband’s theory and we will not engage in speculation regarding the timing or origin of the $36,000 savings. The only evidence regarding Wife’s accumulation of the $36,000.00 was Wife’s testimony that she saved it after she left the marital home out of the cash payments she received for cleaning houses, running errands, and caring for her client’s wife.  The Special Master obviously found Wife’s testimony to be credible.  We give great deference to the Special Master’s assessment of Wife’s testimony and we find no reason to disturb that finding.  Therefore, we will overrule this Exception.

Wife’s Cross-Exceptions

50/50 Split of Marital Assets

The Special Master determined that the parties should divide the marital assets equally.  Wife contends that she should have received a 60 percent share.  She argues that Husband chose to retire at the age of 55 while she had to continue to work to meet the household expenses, that Husband has been in possession of the bulk of the marital assets since separation, and that he has been living on those assets in the marital residence while she has had no financial support from him and must work to meet her expenses. 

Husband counters that Wife is not entitled to a greater share of the marital assets, pointing out that of the factors to be considered in determining equitable distribution, the Special Master found only one that weighed slightly in favor of Wife and one that weighed slightly in favor of Husband.  He also points out that neither of the parties significantly out-earns the other and neither has any health issues which would impact their daily activities.

          In reviewing the factors set forth at Section 3502(a) of the Divorce Code regarding equitable distribution, the Special Master found most to be neutral.  However, he did find that Wife’s contributions as a homemaker and her continuous work as a housekeeper once the children were older weighed slightly in her favor in consideration of the contribution of the parties in the acquisition or appreciation of marital property.  23 Pa.C.S.A. §3502(a)(7).  The Special Master also found that Wife’s accumulation of $36,000.00 in savings post-separation weighed slightly in Husband’s favor when considering the value of the property set aside to each party.  23 Pa.C.S.A. §3502(a)(8). 

          While it is true that Husband has had control of the major marital assets since the time of separation, it appears that he never precluded Wife from accessing any of the joint accounts and that Wife never availed herself of the opportunity to access any marital funds to help with her living expenses.  While it is true that Husband has been living in the marital home since separation, Wife has also had limited living expenses as she lived with the parties’ daughter and her sister for several years.  The parties are nearly the same age and are on equal footing with regard to their ability to accumulate additional wealth or assets.  Wife has now obtained stable housing of her own and she will have adequate resources to meet her rent and other living expenses.  Wife’s monthly income will increase significantly once she begins to receive her share of the annuity distributions and Husband’s Social Security benefits while Husband will no longer have Wife’s share of the annuity payments at his disposal. 

          We believe the 50/50 split of the marital assets is justified under these circumstances.  This Cross-Exception will be overruled.

Denial of Fair Rental Credit

Husband has remained in the marital home since Wife moved out of the home in September 2017.  Wife contends that she should have been awarded a fair rental credit due to Husband’s sole possession of the home and the fact that he has lived there debt-free with minimal expenses.   We find no error on the part of the Special Master in denying her request.

The purpose of an award of credit for the fair rental value of marital property is to compensate a dispossessed spouse for the value of the parties’ residence during the time when the dispossessed spouse was not able to live at the residence.  Ressler v. Ressler, 644 A.2d 753 (Pa. Super. 1984).   An award of fair rental credit is limited to the period of time during which a party is dispossessed and the other party is in actual or constructive possession of the property.  Id. at 757.  An award of fair rental value is not mandatory.  Cerny v. Cerny, 656 A.2d 507 (Pa. Super. 1995).  The dispossessed party must generally have “clean hands” to qualify for the credit such that he or she had good reason to leave the marital residence or was asked to leave by the other spouse.  Lee v. Lee, 978 A.2d 380 (Pa. Super. 2009). 

Wife was not “dispossessed” of the marital home at any time.  The testimony of both parties indicates that Wife left the home voluntarily and was not asked to leave by Husband.  Husband testified that he wanted to work out the issues between the parties and that he did not want Wife to move out.  There was no evidence that Wife had any reason to leave the home or that she was asked to leave by Husband.  Therefore, we will overrule this Exception.

Award of 12% Income Tax Credit to Husband for Annuity Payments

Wife argues that the Special Master erred in awarding Husband a 12% credit for taxes paid on the post-separation annuity payments he received.  She argues that since the parties filed joint income tax returns, she has already fulfilled her responsibility for the taxes on these payments.  Husband argues that the gross amount of the payments received ($108,128.00) has been included as a marital asset subject to distribution.  Since these assets were assigned to him by the Special Master, it is only fair that the gross amount be reduced by the taxes he paid.

We agree that Husband should be entitled to a credit for the income tax he paid on the distributions he received from the two annuities.  While it is true that the parties filed joint returns, Wife contributed nothing to the taxes paid on the distributions.   The Special Master included the total amount of the distributions in the marital assets which are subject to distribution between the parties without reducing that amount by the amount of taxes paid by Husband.  Wife is being awarded half of the total distributions without a reduction for the taxes paid by Husband.  It would be unfair for her to receive the total amount without contributing to the amount of taxes paid by Husband.  Thus, we will overrule this Exception.

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[1] Paragraph 10 of the Decree submitted by the Special Master provided that “Husband shall pay $197,499.11 to Wife … .”  After a deduction for the $1,000.00 for the vehicle sold by Wife, Husband should have been ordered to pay $196,499.12.  This appears to be an inadvertent error and we will correct Paragraph 10 of the Decree to reflect the correct amount in our Order accompanying this Opinion.

[2] Wife’s Cross-Exception to the reimbursement for taxes paid on the annuity distributions is addressed in the section of this Opinion discussing her Cross-Exceptions.