The opinion
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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37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
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* Retired Senior Judge assigned to the Superior Court.
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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
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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.
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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
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3 The remaining distributions of the marital assets are not germane to any of
the issues raised in this appeal.
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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
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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).
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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
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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
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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.
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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
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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
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