Zabrosky v. Smithbower-Zabrosky

273 A.3d 1108

John P. ZABROSKY, Appellant

v.Gina SMITHBOWER-ZABROSKY

No. 487 WDA 2021

Superior Court of Pennsylvania.

Submitted November 9, 2021

Filed April 7, 2022

Terry W. Despoy, Hollidaysburg, for appellant.

Roger D. McGill Jr., Ebensburg, for appellee.

BEFORE: KUNSELMAN, J., KING, J., and COLINS, J.^*

OPINION BY KUNSELMAN, J.:

In this matter, Appellant John P. Zabrosky (Husband) appeals the order issued by the Cambria County Court of Common Pleas, finding him in contempt of the Marriage Settlement Agreement that he executed with Appellee Gina Smithbower-Zabrosky (Wife). Under the terms of the Agreement, Husband represented that he made a full and fair disclosure of his assets, and he further agreed not to remove money from the accounts set aside for the children's post-secondary education. Wife brought a "Petition for Contempt, to Compel, and for Sanctions," alleging that Husband violated these terms when he withdrew tens of thousands of dollars from the accounts to finance his divorce and custody litigation. The trial court found Husband in contempt and awarded Wife a total of $58,767.10 plus $300 in counsel fees. To effectuate Husband's repayment, the court converted the award to Husband's child support obligation and attached various purge conditions. After review, we affirm in part and reverse in part.

The record discloses the following factual and procedural history: The parties separated in June 2016, and two years later they executed a Marriage Settlement Agreement. See Marriage Settlement Agreement, dated 6/6/18, at ¶¶ 1-20. The trial court issued the divorce decree on August 16, 2019. During their marriage, the parties established a "529 account" (sometimes referred to as "529 Plan") for each of their two children, ages 11 and 14. A 529 account is a mechanism for tax-deferred savings for educational expenses. See 2019 IRS Publication 970, "Tax Benefits for Education," at 57; see also 26 U.S.C. § 529 ("Qualified tuition programs"). The parties also purchased tuition credits as a part of their 529 accounts, which meant that the financial benefit of the 529 accounts was greater than its actual dollar value.

The Marriage Settlement Agreement addressed the disposition of this asset:

As of the date of this Agreement [(June 6, 2018)], neither party, without the prior knowledge, and written consent, of the other party shall remove any and/or all monies from any and/or all of the 529 accounts. Either or both parties may add funds to any and/or all of the 529 accounts at any time that they may individually choose to do so. The parties hereby confirm that the 529 accounts are for the education of the parties’ two minor children and shall be used solely for their post-high school educational needs. Upon each child beginning a course of post-high school education, requite funds will be withdrawn to apply toward any and all tuition, room and board, and/or book expenses.

Marriage Settlement Agreement, at ¶2.02(H).

Following the issuance of the divorce decree, Wife discovered that Husband withdrew $2,000 from the children's 529 accounts to pay for the custody litigation. Husband eventually repaid the fund, but Wife's discovery led her to seek a full audit of the 529 accounts.

Wife learned that, prior to the entry of the Marriage Settlement Agreement, Husband had withdrawn $21,572.53 from the children's 529 accounts to finance his portion the litigation. Wife filed a "Petition for Contempt, to Compel, and for Sanctions." Wife claimed that Husband was violated Paragraph 2.02(H) (prohibiting withdrawals from the 529 accounts). She also claimed Husband violated Paragraph 8.01, wherein the parties represented that they had made a full and fair disclosure:

Each party covenants with and represents to the other that he or she has made a full and fair disclosure of all property and interests in property owned or believed to be owned by her or him.

Marriage Settlement Agreement, at ¶8.01.

Wife sought Husband's repayment of the principal sum, but she also requested "interest" totaling $37,197.57. The "interest" figure represented the lost benefit of the tuition credits. According to Wife, both the principal component and the "interest" component were necessary to the award, in order to return the accounts back to the value they would have been had Husband never withdrawn the funds. Wife also requested $300 in counsel fees. Notably, Wife also sought that any award be converted to arrears on Husband's child support obligation, so as to prevent Husband from defeating the award should he file for bankruptcy.

The trial court scheduled a hearing on Wife's petition for January 11, 2021. The hearing was held remotely, in accordance with the Covid-19 protocols. The parties proceeded with a mix of summary testimony and direct testimony. Husband acknowledged that he withdrew from the 529 accounts, but claimed he put Wife on notice that he was doing the same. Husband testified that he asked Wife: "Why are you doing this [litigation]? You're wasting the kids’ college fund." N.T., 1/11/21, at 27, 33. Husband testified that he "figured [Wife] would understand what [he] was talking about." Id. at 28. Husband also argued that his intent was not malicious, that he thought he could take from these accounts as they were in his name. Id. at 33.

The trial court ultimately granted Wife's petition. The court found Husband in contempt, and it granted Wife's relief in full. The court's order directed the Cambria County domestic relations section "to add the sum of $21,572.53 principal and $37,197.57 interest to Husband's child support arrearages[.]" See Order of Court, 3/15/21, at ¶¶1-6. The court directed the domestic relations section to increase Husband's monthly arrearage payment to $250. Id. Finally, the order provided that Husband may purge himself of the contempt by: paying support arrearage payments on time and in full every month; providing written verification of his savings, investments, and/or other accounts to Wife's counsel; by liquidating or borrowing all reasonable sums to satisfy, in full or in part, Husband's child support arrearages; and by remitting to Wife $300 in counsel fees. See id.

Husband timely-filed this appeal. He presents the following issues, which we reorder for ease of disposition:

1. Did the trial court err and/or abuse its discretion in finding Husband in contempt of the parties’ Divorce Decree under all the facts and circumstances of this case and the law applicable thereto?

2. Did the trial court err and/or abuse its discretion in finding that Husband had violated the parties’ [MSA] by withdrawing money, between the date of separation and the date of the [MSA], from the 529 accounts that Husband had established and funded for the parties’ children's education in the absence of any order or agreement prohibiting such withdrawals?

3. Did the trial court err and/or abuse its discretion in awarding interest on the withdrawn funds in the absence of evidence or legal authority to support the award and by directing that the interest on the withdrawn funds be added to the arrearages in the parties’ child support case?

4. Did the trial court err and/or abuse its discretion by directing that the withdrawn funds be added to the support arrearages in the parties’ child support case?

5. Did the trial court err and/or abuse its discretion in the conditions it imposed on Husband to purge himself of the contempt adjudication?

Husband's Brief at 6.¹

At the outset, we observe our relevant standards of review. Marriage settlement agreements, whether prenuptial or postnuptial, are analyzed in accordance with contract principles. Lewis v. Lewis , 234 A.3d 706, 711 (Pa. Super. 2020) (citation omitted). In determining whether the trial court properly applied contract principles, the reviewing Court must decide, based on all of the evidence, whether the trial court committed an error of law or an abuse of discretion. Lewis , 234 A.3d at 711 (citation omitted).

We have said an abuse of discretion

is synonymous with a failure to exercise a sound, reasonable, and legal discretion. It is a strict legal term indicating that an appellate court is of the opinion that there was commission of an error of law by the trial court. It does not imply intentional wrong or bad faith, or misconduct, nor any reflection on the judge but means the clearly erroneous conclusion and judgment—one that is clearly against logic and the effect of such facts as are presented in support of the application or against the reasonable and probable deductions to be drawn from the facts disclosed upon the hearing; an improvident exercise of discretion; an error of law.

Id. (citation omitted).

To the extent we must decide a question of law, however, our standard of review is de novo , and our scope of review is plenary. Id. (citing Stoner v. Stoner , 572 Pa. 665, 819 A.2d 529, 530 n.1 (2003) ).

Although this case concerns a marriage settlement agreement, it also involves contempt. Section 3502 of the Divorce Code delineates the powers of the court when a party fails to comply with the terms of a private agreement between the parties. See 23 Pa.C.S.A. § 3502(e). One of those enumerated powers is the court's power to find a party in contempt. See 23 Pa.C.S.A. § 3502(e)(9). To that end, we also observe that we review contempt orders for an abuse of discretion:

The court abuses its discretion if it misapplies the law or exercises its discretion in a manner lacking reason. Each court is the exclusive judge of contempts against its process. The contempt power is essential to the preservation of the court's authority and prevents the administration of justice from falling into disrepute. Absent an error of law or an abuse of discretion, we will not disrupt a finding of civil contempt if the record supports the court's findings.

Thomas v. Thomas , 194 A.3d 220, 225-26 (Pa. Super. 2018) (citations omitted).

In his first appellate issue, Husband argues that the trial court lacked the ability to find...