In Pennsylvania, a modification to a child support/spousal support/alimony pendente lite order will generally be retroactive to the date that the petition for modification is filed. However, pursuant to 23 Pa.C.S.A. Section 4352(e), "modification may be applied to an earlier period if the petitioner was precluded from filing a petition for modification by reason of a significant physical or mental disability, misrepresentation of another party or other compelling reasons and if the petitioner, when no longer precluded, promptly filed a petition."
The recent Pennsylvania Superior Court case of Krebs v. Krebs, in a lengthy opinion, addressed the issue of a support modification being applied retroactively to a time period prior to the filing of the petition to modify support. In Krebs, a child support case, the parties - who were married on Aug. 6, 1988, separated on Aug. 20, 1996, and subsequently divorced - are the parents of three minor children.
After Mother initially filed a support action in July 1997, the court issued a support order on April 8, 1998, obligating Father to pay Mother child support in the amount of $1,474.33 per month. The order was based on Father's monthly net income of $5,521.02 and Mother's monthly net income of $591.47. On Dec. 15, 2000, Father petitioned to reduce his child support obligation "due to a reduction in his income." On May 21, 2001, the trial court entered a stipulated order reducing Father's monthly child support obligation to $1,360.
In 2006, after Father informed Mother that he had changed jobs and dropped the children's medical insurance coverage effective March 31, 2006, Mother filed a petition on April 24, 2006, to increase the May 21, 2001, child support order. Mother subsequently learned that Father's monthly net income had increased to $6,630 in 2001, $7,625 in 2002, $12,750 in 2003, $14,437 in 2004 and $11,562 in 2005. Mother's monthly net income remained at $2,274 from 2001 to 2005.
On Oct. 25, 2006, before a hearing officer, the parties entered into a stipulation that Father's support obligation, effective Jan. 1, 2006, would be $1,910 plus medical insurance coverage and 60 percent of the medical expenses exceeding $250 per year, per child, and that Father's monthly net incomes had increased to the specific monthly figures stated previously in this article.
"The hearing officer recommended that Father pay retroactive monthly child support payments as follows: $1,807.00 from 1/01/01 - 12/31/01; $2,074.00 from 1/1/02 - 12/31/02; $2,955.00 from 1/1/03 - 12/31/03; $3,007.00 from 1/1/04 - 12/31/04; and $2,769.00 from 1/1/05 - 12/31/05." The court entered an interim order that included an arrearage payment of $1,400 per month on his total arrears of $80,203.49 in addition to his support obligation of $1,910 per month.
Father filed exceptions to the master's recommendation claiming that Mother was not entitled to retroactive modification of the support order prior to the date of her filing a petition to modify.
On Father's exceptions, "[t]he trial court found Father's concealment of substantial increases in income from 2001 to 2005 warranted retroactive modification of Father's support obligation prior to the date of Mother's petition but modified his support arrearages retroactive only to May 21, 2004."
Thereafter, Mother filed a motion for reconsideration with the trial court. On May 29, 2007, the trial court added an arrearages payment of $590 per month on top of Father's current support obligation of $1,910 per month, and confirmed its May 8, 2007, order in all other respects. Therefore, the trial court ordered that the support modification be applied retroactively to May 21, 2004, and that the arrearage payment would be $590 per month as opposed to the conference officer's recommendation that the modification be applied retroactively to Jan. 1, 2001, with an arrearage monthly payment of $1,400. After the trial court's decision, both parties filed appeals with the Superior Court.
Mother raised four issues on appeal. Mother's first two issues on appeal pertained to retroactivity and arrearage payments. Mother argued that the trial court erred as a matter of law "when it failed to order the child support award retroactive to January 2001 when [Father] failed to report the increase in his income to the Domestic Relations Section and/or [Mother]." Mother further argued that "the trial court erred as a matter of law and abused its discretion by only requiring Father to pay the support arrears at the rate of $590.00 per month notwithstanding [Father's] substantial income." Mother's third and fourth arguments on appeal pertained to the awarding of counsel fees. On his cross appeal, Father argued that "the record evidence holds no support for the court's finding that compelling reasons existed to increase Father's child support retroactive to a date before Mother filed the modification petition."
Mother's first argument regarding retroactivity and Father's argument on appeal were addressed together in the Superior Court's opinion. Mother argued that Father's failure to disclose his increased income from 2001 to 2005 "constituted a misrepresentation which effectively precluded Mother from realizing she should file a modification petition."
"Mother argues the court properly ordered Father to pay retroactive child support prior to the date Mother filed the modification petition, but should have imposed arrearages retroactive to January 1, 2001, when Father began to conceal his income."
23 Pa.C.S.A. Section 4352(a.1) provides that an automatic review of support orders may occur, without requiring proof of a change in circumstances. Pursuant to 23 Pa.C.S.A. Section 4353(a), "An individual who is a party to a support proceeding shall notify the domestic relations section . . . and the other parties in writing or by personal appearance within seven days of any material change in circumstances relevant to the level of support or the administration of the support order. . . . " The Superior Court, in citing Section 4353(a) and Simmons v. Simmons, stated: "[t]hus, parties to a support proceeding are duty bound to report material changes affecting support."
The reasoning behind the trial court's decision in making the support modification retroactive to May 21, 2004, instead of January 2001 (when Father's income increased) is that the trial court noted that had the support order been reviewed pursuant to the automatic review provision in 23 Pa.C.S.A. Section 4352(a.1), "Father's increased income would have been considered." The Superior Court found that the trial court's reasoning impermissibly placed the burden on Mother to seek automatic review of the support order on the three-year anniversary of the order "on the chance that Father's changed circumstances might be revealed."
The Superior Court found that the plain language of the statute does not support said reasoning and stated: "The fact that the statute entitled Mother to automatic review of the 2001 support order did not impose upon her any affirmative duty to request automatic review in 2004. Rather, the affirmative duty to report material changes to his circumstances remained with Father. Thus, the court unreasonably shifted the burden to Mother to 'discover' Father's misrepresentation, and transformed a statutory entitlement into a duty to seek automatic review of the 2001 support order every three years or risk losing the additional support Father should have been obligated to pay.
"An interesting wrinkle lies in Father's argument that the parties' 2001 order did not contain language requiring him to notify anyone of changes to his income, unlike the parties' April 8, 1999, support order, which included 'standard language directing each party to report a change of income to the other party and the Domestic Relations Office within seven days.'"
At the support modification conference, Father admitted that he did not report his change in income from 2001 to 2005 to Mother, and "when the hearing officer asked Father if it was correct to say Father 'never notified [Mother] of any income for any one of these years,' and Father responded, 'absolutely.'" Father also argued that he did not report the changes in his income, because he could not determine his exact income due to the monthly fluctuations of his sales commissions.
"Father conceded, however, that he had received a W-2 form by the end of January for each preceding year." In the hearing officer's recommendation, he indicated that it was clear that Father had knowledge of his income or he would not have filed his own petition to reduce support in 2000 when his wages decreased. The Superior Court affirmed the trial court's holding that compelling reasons existed for the retroactive modification regardless of the language in the order.
The Superior Court reiterated that "Mother's responsibility was to file a modification petition promptly when she first had reason to suspect Father's misrepresentations." Within a month of learning that Father had changed jobs and dropped the children from his medical insurance, Mother petitioned to modify support. The Superior Court held that Mother had no access to Father's 2001-05 income tax returns until the hearing on her petition to modify. Therefore, Mother met the requirements under Section 4352(e) for a modification to be applied to a period prior to the filing of her modification petition.
The Superior Court affirmed the trial court's order imposing retroactive support arrearages but reversed the trial court's limiting Father's support arrearages to May 21, 2004, and remanded the case with the direction that the trial court impose Father's child support obligation retroactive to Jan. 1, 2001, "when Father first failed to report his significantly increased income."
With regard to Mother's remaining three issues on appeal regarding the amount of the monthly arrearage payment ordered by the trial court and whether attorney fees should be awarded at the trial court level and/or the appellate level, the Superior Court directed the trial court to address those issues on remand.
This case reiterates the importance of the continuing obligation that parties in a support action have to report to the court and the opposing party any significant changes in circumstances and income that occur on an ongoing basis. Krebs reinforces that if a party's income fluctuates substantially, and that party does not report such a change to the opposing party, the non-reporting party will be deemed to have unclean hands and his or her failure to inform the other party will be viewed as a misrepresentation, and as long as the uninformed party petitions the court promptly upon discovering the concealed change in income, the court may retroactively modify the support order prior to the filing of the petition to modify.
Further, this case is important because it clarifies the issue of whether the automatic three-year review may affect retroactivity, since that issue appears to have not been decided by the Superior Court previously. This author believes that if a party discovers a change in income of the other party but fails to petition the court promptly, it is less probable that the court will order a support modification retroactive prior to the filing of the modification petition.
MICHAEL E. BERTIN is an associate in the Philadelphia law firm of Obermayer Rebmann Maxwell & Hippel. Bertin is co-chairman of the custody committee and a member of the executive committee of the family law section of the Philadelphia Bar Association.
This article is reprinted with permission from the April 8, 2008 issue of The Legal Intelligencer © 2008 NLP IP Company
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