Litigation

the Commonwealth Court reversed the worker's compensation appeal board. On appeal, the Pennsylvania Supreme Court affirmed the Commonwealth Court's decision, with two separate justices dissenting. It held, in this case of first impression, that a WCJ has the responsibility of determining to whom an employer is required to pay benefits. In this limited scope, issues of paternity may have to be determined. It further held that the appropriate evidentiary burden is by a preponderance of the evidence, the same as for other evidence in a worker's compensation hearing. It noted that although in other paternity issues, the standard is higher (clear and convincing evidence), in the limited scope of worker's compensation, the standard of preponderance of the evidence is sufficient to award those benefits and did not violate constitutional principles. Both dissenting justices stated that paternity must always be decided by the courts of common pleas under a clear and convincing evidence standard with proper rules of civil procedure and evidence because paternity impacts substantial liberty interests.

Injunction on the Sale of Marital Assets

Nonparty corporations and its nonparty members can be bound by an injunction in a matrimonial action prohibiting the dissipation of marital assets, including the corporations, even where the corporation has other members besides the party spouse. Ricatto v. Ricatto, Supreme Court of New York, Appellate Division, Second Department, Index No. 19174/02, 2002-10481, February 23, 2004.

The husband, Ricatto, and his business partner (Jacobson) each owned 50% of various parcels of real property that were incorporated as LLCs. During the course of Ricatto's matrimonial litigation, the court issued a temporary restraining order (TRO) enjoining Ricatto from, inter alia, disposing of or diminishing his interest in the LLCs. The TRO was filed with the city register and Jacobson and the LLCs moved for an order declaring that the TROs did not apply to the LLCs. The court granted the motion for the limited purpose of allowing the sale of one of the LLCs. The court warned that if any new property were acquired, the new property would be subject to the TRO. Jacobson and the LLCs appealed, arguing that the court should have granted the motion in its entirety. The appellate court affirmed the lower court's decision. The appellate court held that even though neither Jacobson nor the LLCs were parties to the matrimonial action, they could be bound by the injunction if “they are servants or agents of the defendant … or act in collusion or combination with him.” Here, Jacobson admitted that the husband was responsible for the financial backing of the acquisition of the LLCs, while Jacobson managed the properties. Furthermore, in light of the husband's 50% ownership in the LLCs, Jacobson was unable to demonstrate that the LLCs operated independently of the husband.

Florida Spouses Entitled to Upward Modification of Child Support

Under Florida law, if there is a substantial change in circumstances since the time of the agreement that would result in at least a 15% or $50 modification, either spouse is entitled to a modification of the original child support order Jacobs v. Jacobs, Case No. 3D02-2260, Court of Appeal of Florida, Third District, February 11, 2004.

The parties were married in 1989 and divorced in 1998. Three children were born during the marriage. The parties' settlement agreement provided that the husband would pay $1000 per month in child support to the wife as custodial parent. The agreement further provided that if the husband's future income would exceed a certain sum, the husband was required to pay for private school tuition. The agreement also provided that the husband would purchase a prepaid college tuition contract for each child. In 1999, the wife moved for relief from the marital judgment, claiming

that she had been deceived by the husband's actual financial position. The motion also contained a request for upward modification of child support based upon the husband's actual income.

The trial court granted the upward modification and other relief from the matrimonial judgment and the husband appealed. The court affirmed in part and reversed in part. With respect to the non-child support relief from the matrimonial judgment, the appellate court held that the wife had access to the husband's true financial position at the time of the divorce. Therefore, she was not entitled to relief from the matrimonial judgment. However, as the husband's actual financial position related to child support, the wife was entitled to relief under Florida law. The state guidelines provided that if there is a substantial change in circumstances since the time of the divorce that would result in at least a 15% or $50 modification (whichever is greater), either spouse is entitled to a modification of the original child support order. In this case, because the husband's actual income exceeded the 15% threshold, the wife was entitled to the upward modification. The appellate court dismissed the husband's argument that he should be entitled to credits for a mandatory stock purchase as a partner in his law firm and for the fact that he purchased the children's prepaid college tuition contracts early.

Discharge of Marital Debt in Bankruptcy

The non-debtor spouse is in violation of Bankruptcy Code '524(a)(2) where such spouse seeks to obtain a modification of the bankruptcy court's discharge of debt; once a property settlement obligation is discharged in bankruptcy, the state court can neither re-impose the settlement nor impose a new settlement. A spouse and/or the attorney who seeks such relief may be subject to sanctions. In re: The Matter of Terry Lee Fluke, Debtor, Chapter 7, Case No. 00-01364 (PJW), United States Bankruptcy Court for the District of Delaware, February 10, 2004.

The husband and wife were divorced in Pennsylvania on Feb. 17, 2000. Their divorce decree incorporated a settlement agreement that distributed the parties' marital property, including accumulated joint debt and the husband's Coast Guard retirement benefits. The husband agreed to assume certain debts and the wife agreed to assume $9415.15 in credit card and installment debt. The agreement further provided that the wife was entitled to 30% of the husband's retirement benefits. Thereafter, the wife filed a voluntary Chapter 7 petition on March 8, 2000 with the Bankruptcy court of Delaware. On June 9, 2000, the husband commenced an adversary proceeding challenging the dischargeability of the debt. After a hearing, the bankruptcy court determined that the wife satisfied both parts of Bankruptcy Code '523(a)(15) and discharged the $9414.15 in credit card debt. As a result, the debt remained the obligation of the husband.

On Nov. 26, 2001, the husband filed a petition for special relief with the divorce court in Pennsylvania. He argued that because of the wife's “bad faith” in discharging her debts in the bankruptcy court, she should be disqualified from receiving the 30% of the husband's retirement pension under the parties' settlement agreement. Rather than granting the husband the relief he sought, the divorce court required the wife to pay the husband the $9414.15 in 36 equal monthly installments of $261.53. The wife failed to pay the husband the first two monthly installments as ordered by the divorce court. The husband petitioned the divorce court for sanctions against the wife and petitioned the bankruptcy court to reopen the bankruptcy case. In the bankruptcy case, the wife argued that the husband's petition for relief and his petition for sanctions violated the bankruptcy court's discharge injunction under '524(a)(2).

The bankruptcy court held that the husband's conduct in seeking and obtaining a modification of the parties' settlement agreement in light of the wife's discharge of debt in bankruptcy was a violation of '524(a)(2). It held that under the extensive case law on this issue, once a property settlement obligation is discharged in bankruptcy, it can neither be re-imposed by the state court nor can the state court impose a new settlement. The court noted that in some cases, a post discharge modification could be appropriate, such as where there are alimony or child support obligations. However, in this case, there were no ongoing support obligations. The court noted that sanctions would be appropriate against the husband's divorce attorney, but was unable to impose sanctions because the husband's attorney was not a member of the bar of the state in which the bankruptcy court presided and the divorce attorney had never appeared before the bankruptcy court. The bankruptcy court noted it was at the option of the wife's counsel whether to pursue sanctions against the husband and/or the husband's divorce attorney.

Workers' Comp Judge Can Determine Paternity

A workers' compensation judge (WCJ) has limited jurisdiction to determine paternity under a preponderance of the evidence standard where such a determination is necessary to distribute worker's compensation benefits. Rossa v. Workers' Compensation Appeal Board of the City of Philadelphia , No. 30 EAP 2002, Pennsylvania Supreme Court, December 30, 2003.

On Dec. 13, 1990 Patricia Rossa gave birth out of wedlock to Ashley Rossa. On Feb. 6, 1991, Daniel Boyle, the putative father, died as a result of suffering a gunshot wound to his head sustained in the course and scope of his employment by the Philadelphia Police Department. Daniel Boyle was never judicially determined to be Ashley's father but was listed on Ashley's birth certificate as Ashley's father. The birth certificate was filed before his death. On March 20, 1992, Patricia, on Ashley's behalf, filed a claim with the Worker's Compensation Board seeking fatal claim benefits. The City of Philadelphia denied that Ashley was Daniel Boyle's child and denied the application for benefits. On Oct. 25, 1995, the Worker's Compensation Judge (WCJ) assigned to the case postponed the matter indefinitely until the parties filed a paternity claim in the Philadelphia Court of Common Pleas. On Aug. 5, 1999, no paternity determination had been made by the Court of Common pleas, but Ashley's attorney moved to have the case removed from inactive status. Despite the city's objections, a hearing was held before the WCJ on Oct. 22, 1999. On April 20, 2000, the WCJ determined that based upon the preponderance of the credible evidence, Daniel Boyle was Ashley's fathe,r and granted Ashley's fatal claim petition. The city appealed to the worker's compensation appeal board, which reversed, holding that the WCJ did not have jurisdiction over paternity issues. Ashley appealed, and

the Commonwealth Court reversed the worker's compensation appeal board. On appeal, the Pennsylvania Supreme Court affirmed the Commonwealth Court's decision, with two separate justices dissenting. It held, in this case of first impression, that a WCJ has the responsibility of determining to whom an employer is required to pay benefits. In this limited scope, issues of paternity may have to be determined. It further held that the appropriate evidentiary burden is by a preponderance of the evidence, the same as for other evidence in a worker's compensation hearing. It noted that although in other paternity issues, the standard is higher (clear and convincing evidence), in the limited scope of worker's compensation, the standard of preponderance of the evidence is sufficient to award those benefits and did not violate constitutional principles. Both dissenting justices stated that paternity must always be decided by the courts of common pleas under a clear and convincing evidence standard with proper rules of civil procedure and evidence because paternity impacts substantial liberty interests.

Injunction on the Sale of Marital Assets

Nonparty corporations and its nonparty members can be bound by an injunction in a matrimonial action prohibiting the dissipation of marital assets, including the corporations, even where the corporation has other members besides the party spouse. Ricatto v. Ricatto, Supreme Court of New York, Appellate Division, Second Department, Index No. 19174/02, 2002-10481, February 23, 2004.

The husband, Ricatto, and his business partner (Jacobson) each owned 50% of various parcels of real property that were incorporated as LLCs. During the course of Ricatto's matrimonial litigation, the court issued a temporary restraining order (TRO) enjoining Ricatto from, inter alia, disposing of or diminishing his interest in the LLCs. The TRO was filed with the city register and Jacobson and the LLCs moved for an order declaring that the TROs did not apply to the LLCs. The court granted the motion for the limited purpose of allowing the sale of one of the LLCs. The court warned that if any new property were acquired, the new property would be subject to the TRO. Jacobson and the LLCs appealed, arguing that the court should have granted the motion in its entirety. The appellate court affirmed the lower court's decision. The appellate court held that even though neither Jacobson nor the LLCs were parties to the matrimonial action, they could be bound by the injunction if “they are servants or agents of the defendant … or act in collusion or combination with him.” Here, Jacobson admitted that the husband was responsible for the financial backing of the acquisition of the LLCs, while Jacobson managed the properties. Furthermore, in light of the husband's 50% ownership in the LLCs, Jacobson was unable to demonstrate that the LLCs operated independently of the husband.

Florida Spouses Entitled to Upward Modification of Child Support

Under Florida law, if there is a substantial change in circumstances since the time of the agreement that would result in at least a 15% or $50 modification, either spouse is entitled to a modification of the original child support order Jacobs v. Jacobs, Case No. 3D02-2260, Court of Appeal of Florida, Third District, February 11, 2004.

The parties were married in 1989 and divorced in 1998. Three children were born during the marriage. The parties' settlement agreement provided that the husband would pay $1000 per month in child support to the wife as custodial parent. The agreement further provided that if the husband's future income would exceed a certain sum, the husband was required to pay for private school tuition. The agreement also provided that the husband would purchase a prepaid college tuition contract for each child. In 1999, the wife moved for relief from the marital judgment, claiming

that she had been deceived by the husband's actual financial position. The motion also contained a request for upward modification of child support based upon the husband's actual income.

The trial court granted the upward modification and other relief from the matrimonial judgment and the husband appealed. The court affirmed in part and reversed in part. With respect to the non-child support relief from the matrimonial judgment, the appellate court held that the wife had access to the husband's true financial position at the time of the divorce. Therefore, she was not entitled to relief from the matrimonial judgment. However, as the husband's actual financial position related to child support, the wife was entitled to relief under Florida law. The state guidelines provided that if there is a substantial change in circumstances since the time of the divorce that would result in at least a 15% or $50 modification (whichever is greater), either spouse is entitled to a modification of the original child support order. In this case, because the husband's actual income exceeded the 15% threshold, the wife was entitled to the upward modification. The appellate court dismissed the husband's argument that he should be entitled to credits for a mandatory stock purchase as a partner in his law firm and for the fact that he purchased the children's prepaid college tuition contracts early.

Discharge of Marital Debt in Bankruptcy

The non-debtor spouse is in violation of Bankruptcy Code '524(a)(2) where such spouse seeks to obtain a modification of the bankruptcy court's discharge of debt; once a property settlement obligation is discharged in bankruptcy, the state court can neither re-impose the settlement nor impose a new settlement. A spouse and/or the attorney who seeks such relief may be subject to sanctions. In re: The Matter of Terry Lee Fluke, Debtor, Chapter 7, Case No. 00-01364 (PJW), United States Bankruptcy Court for the District of Delaware, February 10, 2004.

The husband and wife were divorced in Pennsylvania on Feb. 17, 2000. Their divorce decree incorporated a settlement agreement that distributed the parties' marital property, including accumulated joint debt and the husband's Coast Guard retirement benefits. The husband agreed to assume certain debts and the wife agreed to assume $9415.15 in credit card and installment debt. The agreement further provided that the wife was entitled to 30% of the husband's retirement benefits. Thereafter, the wife filed a voluntary Chapter 7 petition on March 8, 2000 with the Bankruptcy court of Delaware. On June 9, 2000, the husband commenced an adversary proceeding challenging the dischargeability of the debt. After a hearing, the bankruptcy court determined that the wife satisfied both parts of Bankruptcy Code '523(a)(15) and discharged the $9414.15 in credit card debt. As a result, the debt remained the obligation of the husband.

On Nov. 26, 2001, the husband filed a petition for special relief with the divorce court in Pennsylvania. He argued that because of the wife's “bad faith” in discharging her debts in the bankruptcy court, she should be disqualified from receiving the 30% of the husband's retirement pension under the parties' settlement agreement. Rather than granting the husband the relief he sought, the divorce court required the wife to pay the husband the $9414.15 in 36 equal monthly installments of $261.53. The wife failed to pay the husband the first two monthly installments as ordered by the divorce court. The husband petitioned the divorce court for sanctions against the wife and petitioned the bankruptcy court to reopen the bankruptcy case. In the bankruptcy case, the wife argued that the husband's petition for relief and his petition for sanctions violated the bankruptcy court's discharge injunction under '524(a)(2).

The bankruptcy court held that the husband's conduct in seeking and obtaining a modification of the parties' settlement agreement in light of the wife's discharge of debt in bankruptcy was a violation of '524(a)(2). It held that under the extensive case law on this issue, once a property settlement obligation is discharged in bankruptcy, it can neither be re-imposed by the state court nor can the state court impose a new settlement. The court noted that in some cases, a post discharge modification could be appropriate, such as where there are alimony or child support obligations. However, in this case, there were no ongoing support obligations. The court noted that sanctions would be appropriate against the husband's divorce attorney, but was unable to impose sanctions because the husband's attorney was not a member of the bar of the state in which the bankruptcy court presided and the divorce attorney had never appeared before the bankruptcy court. The bankruptcy court noted it was at the option of the wife's counsel whether to pursue sanctions against the husband and/or the husband's divorce attorney.